Canada inflation rate could reach four-decade high

Ephraim Vecina
other

This could force the Bank of Canada into implementing even larger interest rate jumps

Canadian inflation is likely to reach its fastest pace since 1983, with a Bloomberg survey of economists pegging an average annual inflation rate of 7.3% in May.
Such a level will provide ample cause for the Bank of Canada to push through with a 75-basis-point interest rate hike in its next policy meeting on July 13, the survey found.
Approximately 80% of experts polled by Bloomberg, including representatives from all Big Six banks, are expecting an outsized hike of that magnitude in the next BoC meeting, follow the precedent set by the United States Federal Reserve.
Read more: Former BoC governor Dodge outlines key challenges for Canadian policy
Comments from the central bank’s head have cemented these expectations. BoC Governor Tiff Macklem said earlier this month that a benchmark interest rate of 3% or above is not out of the question. Macklem also alluded to the possibility of even larger rate increases down the line.
“The housing market is an important part of the economy. We are watching it closely, but our focus ultimately is on the whole economy and in getting inflation back to target,” Macklem said.
The rate is currently hovering at 1.5%, after hikes in three straight BoC policy meetings.

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Toronto housing market is balance gradually returning?

Ephraim Vecina
other

Canada housing crash – what could make it happen?

Jonathan Russell
other

Plus: How to navigate home appraisals during Canada’s volatile housing market

 Is Canada’s housing crash imminent? Mortgage experts are saying—not so fast. While housing prices are dropping, we are still up historically. Here is what is happening to Canada’s housing market and here is how you can navigate home appraisals.

Are home prices in Canada falling?

In the current economic environment of rising interest rates, home prices in many cities across Canada have fallen month over month. Despite this current trend, however, home prices are still significantly higher than they were at this same time in 2021. According to the Canadian Real Estate Association, the average national home price sat at around $746,000 in April—which was 7.4% higher than in April 2021. That was despite the effect that higher interest rates have had on the housing market.

The Greater Vancouver Area, for instance, saw detached home prices drop just 0.4% since April—however, that is still more than 15% higher than it was last year during the same period. For attached homes, the prices rose 21.5% compared to those in May 2021, despite dropping 0.6% since April, according to the Real Estate Board of Greater Vancouver.

Meanwhile, in Toronto, home sales fell nearly 40%, even though they had risen nearly 10% since May 2021 and last month, the Toronto Regional Real Estate Board said.

What are experts saying about the likelihood of Canada’s housing crash?

Many experts in Canada’s mortgage industry appear unconvinced that Canada will experience a full-blown housing crash. Instead, experts have told Canadian Mortgage Professional that the low-rate environment during the early part of the COVID-19 pandemic has spurred the inevitable drop the market is currently experiencing toward more normal levels.

In other words, the unsustainable pace set in April 2020 has tailed off, but Canada’s housing market is still seeing high standards historically. “The last couple of years, we’ve been going at 150 km/h down a 100 km/h highway, and right now we’re slowing back down to around that 100-120 km/h range,” explained Shubha Dasgupta, president and CEO of the Pineapple broker network. “So really, we haven’t even dipped below the speed limit yet. We’re still above it—we’re breaking in and around that, but it just feels like we’re going a lot slower.”

Christelle Mwamba of Mortgage Scout agreed. “I want to make sure everybody knows we are not going to crash,” she said. “We’re not crashing—it’s just a correction. It’s really important for people not to focus too much on the headlines and actually be knowledgeable.”

What will happen to home appraisals amid Canada’s volatile housing market?

Due to Canada’s volatile housing market, brokers and clients alike are being forewarned that home appraisals may come in at significantly lower values than the listed or agreed price. This warning also applies to brokers and clients who agreed on purchase prices as recently as the middle of February, according to Home Value Inc.

Despite home prices rising year over year in the Greater Toronto Area, or GTA, home prices dropped three months in a row, in some areas more dramatically than others. In the Kitchener-Waterloo region, for instance, the average price of a detached home is roughly $200,000 lower than it was in February. And across the GTA, average home prices in May were $121,000 less than they were three months before.

What should you do if your home appraisal comes in at a significantly lower value?

If your home appraisal comes in at a significantly lower value amid Canada’s housing market volatility, you could speak with the realtor and real estate lawyer to figure out if you can whittle down the property price. This option would apply especially to anyone whose appraisal means that you fail to secure a large enough mortgage to cover the payments on the property.

If you required an appraisal on a property that you are refinancing, it is important that the house looks especially presentable and approachable, says Leah Zlatkin, mortgage broker and LowestRates.ca expert, who added that you should also highlight your home’s features to any appraiser that comes through the property.

Brokers can also trigger an automatic valuation model, or AVM. This would be a good option if you are doing a refinance and need less than the property value for the mortgage. For instance, if your property is worth $1.15 million but you need roughly $400,000 in mortgage money, you can value the property at less than $1 million to secure an AVM instead of meeting with an appraiser. Because current market conditions mean there is usually a longer wait time for an appraiser, this can be a particularly good option.

 

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Kitsilano resident group rejects proposed social housing building, calls for better model

Tahmina Aziz
other

Kitsilano resident group rejects proposed social housing building, calls for better model

Tahmina Aziz
other

 A vocal group in Kitsilano is once again rejecting plans for a social housing building in the neighbourhood.

The 13-storey building would provide 129 social housing units to low-income people and those experiencing homelessness.

Kitsilano Coalition released a statement on Thursday, arguing that congregate housing is not the appropriate solution for people experiencing homelessness and suffering from mental illness and addiction. 

“We’re housing too many vulnerable individuals all in one place,” said Karen Finnan, a member of the organization.

“If you wanted to quit smoking, would you want to be in a building where there’s another 120 smokers? So, we feel for people to have the best motivation and the best options to move on to a better life, they’re better housed in with all the rest of us.”

Mental health and addictions expert Julian Somers said Finnan’s concerns are valid.

“The problem with congregating people altogether is that the culture that they’ve been apart of on the street becomes the culture of the building. And there really is no opportunity for mobility, for an experience of basic change,” he explained.

But the province supports shared living and says the model has proven to work.

“It’s a really positive thing to respond to the homelessness crisis we face as opposed to leaving people in their vehicles, leaving people in tents and parks, and letting that problem just get worse,” said David Eby, B.C.’s Attorney General and minister responsible for housing.

“(The model) is very similar to other buildings that have opened up in other parts of Vancouver where people were concerned and then the building opened and then they realized their concerns were misplaced,” he added.

Eby said he sympathizes with the group and will ensure their concerns are addressed.

“There’s not a lot of social housing on the west side of the city and it’s not very common that people are asked to support this kind of housing,” he said. “I want to reassure to people if issues did come up, that I would be quick to respond to them because we need housing like this across the city.”

Darrell Burnham, the CEO of Coast Mental Health, which operates a number of congregate affordable housing units, agrees with Eby and said the model can be a success.

“I think it’s safe to say that most of our sites are invisible to the community as the tenants go about their daily lives,” he said in a statement.

“It’s very common, almost the norm, to have community pushback and concerns about the development, but with competent management and good communications, these concerns generally go away within the first year of operation.”

But Somers, who is also a professor at SFU, strongly disagrees and said there are more effective ways to address the homelessness crisis.

He said the best option for those overcoming addiction is independent, recovery-focused housing, which allows people to effectively reintegrate back into society.

“Why is it that we are not embracing an evidence-based approach that costs the same, reduces crime far more effectively, reduces medical emergencies far more effectively?” Somers said.

The city is holding a public hearing on the proposal on June 28.  

 

© 2022  All rights reserved.

No need to panic about cooling housing market crash unlikely

Joel Schlesinger
The Vancouver Sun

Desjardins Economics notes sales expected to slow in Canadian Residential Real Estate Outlook.

Desjardins Economics says a Canadian real estate market correction is going on, but not a crash. Photo by Luke Hendry /Postmedia
Canada’s housing market is cooling, but it’s not cause to panic, suggests a new report by a leading Canadian financial institution.
Desjardins Economics recently issued its Canadian Residential Real Estate Outlook, noting that pandemic fuelled demand that saw the nation have world-leading price gains has begun to abate amid high prices in large markets like Toronto and increasing borrowing costs.
Nationally, the market’s average home price could fall more than 15 per cent from February this year by December 2023.
Still, even by then, average home prices will remain 30 per cent above average prices at the end of 2019. At the time, the average price in Canada was $530,000, increasing to slightly more than $790,000 this past February, which is considered the peak of the market.
That’s a 50 per cent increase in value over two years, it stated.
Since February, prices have started to fall, dropping by more than six per cent in March and April alone. Sales fuelled the decline dropping by more than 30 per cent over those two months combined. The report added expected increases in borrowing costs will further weigh on the market in the coming months. These headwinds aside, the report authors made clear a correction in overheating prices is underway but not a “collapse.”
As well, price corrections will be uneven by region with British Columbia (-15 per cent), Ontario (-18 per cent), Quebec (-12 per cent) and the Maritime provinces (-18 to -20 per cent) expected to see the most significant drops in price by 2023. In contrast, Alberta may see a price retraction of six per cent, trailing only Saskatchewan (-2 per cent) and Newfoundland (-5 per cent) with the report noting all three provinces will see muted impact due to continued strength in the energy sector.

© 2022 Vancouver Sun

Howe Street corner office sells at full list of $1.29 million

Western Investor Staff
The Vancouver Sun

Strata office of 1,051 square feet in downtown Vancouver sold for nearly $350,000 over assessment value.

Re/Max Commercial Advantage, Vancouver, for Western Investor

Property type: Office strata

Location: 801, 1081 Howe Street, Vancouver

Property size: 1,051 square feet

Zoning: DD (Downtown district)

BC Assessment value: $950,000

List price: $1.298 million

Sale price: $1.298 million

Date of sale: May 31, 2022

Brokerage: Re/Max Commercial Advantage, Vancouver

Broker: Steve Da Cruz

 

© 2022 Western Investor

Here is how much the average apartment costs to rent in Vancouver in June 2022

Elana Sheperta
Western Investor

Canadian rental prices have seen the highest month-over-month increase in years.
Canada has seen the biggest rental increase in June 2022 in years, according to Rentals.ca. Find out prices in Toronto, Burnaby, Oakville and Burlington.Photo via Feng Wei Photography/Moment/Getty Images
A new report finds that rental prices across Canada have seen the biggest month-over-month increase in years — and Vancouver continues to see the highest rent in the country. 
Online apartment rental platform Rentals.ca has released its June 2022 National Rent Rankings report, which analyzes the average rental prices for its listings in May. 
Across Canada, the average rent for apartments in May was $1,888, which represents a year-over-year increase of 10.5 per cent. 
“This also represents a month-over-month increase of 3.7 [per cent], the largest monthly increase since May of 2019,” note the report authors. 
Vancouver continues to see the highest rental prices in Canada, for both one and two-bedroom units. The average cost of a one-bedroom apartment in May 2022 was $2,377, which is a 1.8 per cent increase over last month and a whopping 19.1 per cent year-over-year increase. 
Two-bedroom apartments cost an average of $3,495 in May, marking an increase of 5.1 per cent over last month and a staggering 24.1 per cent increase year-over-year. 
Toronto has the second-highest rental prices in the country, with one-bedroom units averaging $2,133 in May; two-bedroom units averaged $3,002. 
Another B.C. city, Burnaby, rounded up the top three most expensive cities in Canada. One-bedroom apartments cost $2,012 while two-bedroom units cost $2,645 in May. 
Two Ontarian cities completed the top five highest Canadian rental markets in May: Oakville and Burlington.

Rent Vancouver and beyond: Average prices across Canada for apartments to rent

© 2022 Western Investor

PTT thresholds: REBGV makes housing affordability recommendations to province

REBGV Staff
REBGV

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

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

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

This year, REBGV urged the provincial government to: 

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

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

 

 

© ‘REBGV’ is a registered trademark

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

Ian Holliday
other

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

© 2022  All rights reserved.