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Calgary’s real estate activity and prices have grown compared to pre-pandemic levels

Friday, January 6th, 2023

Calgary Finishes 2022 Strong with Price and Sales Growth: CREB

Abbey Cole
ZOOCASA

Despite an annual downward trend from peaks seen earlier in the year, December’s benchmark price of $518,800 is 8% higher than last year, and overall, prices are still over 12% higher than they were a year ago.

However, the Calgary Real Estate Board (CREB) reported that sales activity in December was down 30.6% year-over-year, while new listings decreased by 16.3%. Calgary‘s already reduced inventory levels fell to 2,214 units last month — the lowest recorded December level in more than ten years.

Nevertheless, Calgary’s real estate activity and prices have grown compared to pre-pandemic levels and are more significant than the city’s long-term patterns.

Tighter Circumstances Enabled Strong Prices After Several Years of Being Oversupplied

The 2022 housing market typically fared better than anticipated. The low ratio of supply levels to sales activity for lower-priced, detached properties continues to favour the seller. The December benchmark price was $619,600, only a 4% decline from the 2022 high reported in June.

Throughout Calgary, semi-detached homes experienced a similar trend brought on by further losses in sales this month. Although sales have decreased from last year’s record highs, they are still much higher than long-term trends and levels before the pandemic. Benchmark prices have experienced gains of 12% compared to 2021, and in the North district, prices for semi-detached homes are up by 18% year-over-year.

In Cochrane, the benchmark price rose to $504,067, roughly 17% compared to prices from the previous year. Price increases were most pronounced in the detached and semi-detached sectors, where prices increased by a combined 19%, setting a new price record for 2022.

Read more: The Highs and Lows of Alberta’s Property Tax Rates in 2022

Inflation Favours Rows and Condos

Although a significant drop in new listings negatively impacted sales throughout the final few months, the city’s yearly sales in 2022 totalled 29,672, setting a new record high. In addition to being a record year, sales of row homes were over two times higher than long-term averages, with a total of 5,153 trading hands.

Compared to other property types, apartment condominium sales maintain annual growth above levels from the prior year due to the need for reasonably priced goods and revived investor interest due to rising rental rates. Year-to-date sales increased by 50% to 6,221 units, a new high.

Read more: Three of the Top Family Friendly Neighbourhoods in Calgary

Inventory levels dropped to its lowest point since 2013 as of December. Due to this, sellers will continue to benefit from this market niche.

Despite a challenging year on a national level, real estate sales in Calgary are up, prices are still high, and demand is robust. Let us connect you to a local real estate agent! Download our free Buyer’s or Seller’s Guides if you’re considering a move in Calgary or the surrounding areas.

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BC’s increase supply in 2023 to meet housing and immigration targets

Friday, January 6th, 2023

Delivering new Metro Vancouver rentals now next to impossible

Claire Wilson
Western Investor

Changes will be needed in 2023 to accommodate high costs, interest rates and competitive government programs to meet immigration and housing targets, builders say

As British Columbia looks to increase supply in 2023 to meet housing and immigration targets, there are industry concerns that construction costs, high interest rates and government programs that no longer accommodate the current market are making purpose-built rentals next to impossible to move forward with, according to Brad Jones, senior vice-president of Wesgroup Properties.

Prior to six months ago, rental projects saw a boom as a result of low interest rates and government programs, like Canada Mortgage and Housing Corp.(CMHC) Rental Construction Financing Initiative (RCFi), that provided many incentives, said Jones.

“That’s really changed. The prospects of doing rental now are incredibly difficult as a result of some of those incentive programs changing, as well as the increase in interest rates,” he said.

Jones noted increasing numbers of applications and competition among developers as one of the driving factors of the RCFi becoming less desirable.

“What we’re really facing now, and starting to really see going into next year, is a fairly significant increase in government fees and charges for amenity delivery, infrastructure, servicing, etc,” he said.

According to a CMHC report on how to increase affordability by 2030, the private sector will be “critical” in addressing the supply shortfall. This comes at a time when the federal government announced that Canada had set a new immigration record with 431,645 new permanent residents in 2022, according to a press release from Immigration Minister Sean Fraser.

“I’m fairly worried about what rents are going to do over the next few years with the level of immigration that we’re going to see, in addition to a slowdown in construction across the board as a result of high cost and high interest rates,” he said.

According to Jones, rental rates have increased 17 per cent in Vancouver since mid-2022.

Hani Lammam, executive vice-president at Cressey Development Group, cites uncertainty in zoning and government financing as the main roadblocks for purpose-built rentals.

“When you have developers competing as to who can provide more sustainability and accessibility or more affordability, it just becomes treated as a level of uncertainty,” Lammam said. “Without certainty that we can get the financing, why would we go through a three or four year rezoning approvals process, only to get turned down because they didn’t like the benefits package that we put forward?”

Going forward, Lammam believes that municipalities should look to pre-approve zoning for land meant for purpose-built rentals in order to cut back on the red tape needed to get approvals.

Both Lammam and Jones said they want to see changes made to the RCFi in order to provide funding with as few barriers as possible.

Shawn Bouchard, vice-president of Quadra Homes, submitted a report to the federal government June 2022 that looks to tweak the RCFi. With this program, the funds are borrowed by the developer in the form of a mortgage directly from the Bank of Canada (BOC). However, due to increased demand on the program, projects are not being funded and annual allocation is too low.

Bouchard is proposing an increase in funding and the creation of a fixed low-interest rate direct from the BOC. According to the report, the only cost to the government would be administrative. In addition, significantly increasing the program does not impact federal expenditures or budget, according Bouchard.

“That way, they can provide a low interest rate and it doesn’t cost anything to the taxpayer, it doesn’t cost anything to the government. The government actually gets all that money back and the interest rate that they charge actually becomes a revenue stream,” he said.

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Metro Vancouver on track for strong but not record-breaking performance in 2022

Thursday, January 5th, 2023

Greater Vancouver investment deals stalled in third quarter

Peter Mitham
Western Investor

Metro Vancouver deals slow but stabilizing interest rates offer hope

Wesgroup’s $152.8 million purchase in September of the Coronation Park site in Port Moody was among the biggest investment deals of the third quarter.

A range of macroeconomic factors led by rising interest rates stalled real estate investment in the third quarter, putting Metro Vancouver on track for strong but not record-breaking performance in 2022.

Third-quarter sales data from Altus Group indicate 435 deals were done with an aggregate value of $2.3 billion. Total deal value was down nearly 39 per cent from a year earlier, and continued the slowing trend seen since the first quarter, when nearly $5 billion worth of transactions took place. This was off from a peak of $5.2 billion worth of investment activity in the final quarter of 2021.

“The macroeconomic headwinds that have been building since the start of the year have finally impacted investor sentiment to such an extent that a significant drop in dollar volume in the third quarter was the result,” Andrew Petrozzi, director, commercial research, Western Canada with Altus said in his analysis of the data. “This reduced level of activity is expected to continue to impact most asset classes and persist through the fourth quarter.”

Slow deal activity in the third quarter puts the Metro Vancouver market on track to fall short of the record $16.1 billion in transactions recorded last year.

“The year will still remain one of the strongest in terms of overall dollar volume recorded in recent history,” Petrozzi noted.

The most resilient segment of the market was land, with residential and ICI deals totaling nearly $1.6 billion.

Residential land, with $962 million worth of transactions saw the greatest activity and also recorded the smallest decline in activity from a year ago at 15 per cent. The quarter’s largest deal, Wesgroup’s purchase of the Coronation Park land assembly in Port Moody in September, was the most significant residential land transaction. It involved nearly 60 residential properties totaling 14.8 acres. The total value was $158.2 million.

ICI land transactions totaled nearly $631 million, down 31 per cent from a year ago but still more resilient than commercial or industrial properties. The most notable deal was Conwest’s acquisition of an 18.4-acre site at 56th Avenue and 264th Street in Langley for $43.2 million in July. The site is intended for light industrial development as part of the Gloucester Industrial area, pending approval from the Township of Langley.

The greatest decline in the quarter was seen for multifamily rental properties, which saw just short of $65 million in deals – a decline of 83 per cent versus a year earlier.

“This decline occurred not because demand for the asset class had diminished but could be the result of investors holding onto multifamily residential assets due to rising immigration levels and the asset class continuing to provide stable returns in a volatile environment,” Petrozzi said.

Stepping back and viewing the quarter in context, residential and ICI land continued to see strong growth in the first nine months of the year. Residential investment activity was up 70 per cent by value and ICI transactions were up eight per cent. Retail and industrial assets also continued to see strong demand in the first nine months of the year as demand for logistics space remained strong and retail properties found their feet with the ebbing of pandemic-related concerns.

A stabilizing interest rate environment will help deals move forward in 2023, with some signs of recovery beginning to be seen in preliminary data from the last quarter of 2022.

“We have seen moderate deal activity in October and November, and with that we anticipate there will be a fair amount of cautious optimism moving into 2023,” Petrozzi said. “There is continued interest in the market for a wide range of assets.”

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Pent-up demand for travel is fuelling hoteliers growth plans despite ongoing fears of a recession in 2023

Thursday, January 5th, 2023

Vancouver hoteliers pursue growth despite recession fears

Peter Mitham
Western Investor

Strong leisure demand drives expansion plans across North America

ancouver-based Coast Hotels added five properties to its portfolio in 2022, including the Coast Calgary Downtown Hotel & Suites by APA. It’s now looking Stateside for growth opportunities.Coast Hotels Ltd.

Pent-up demand for travel is fuelling hoteliers’ growth plans despite ongoing fears of a recession in 2023.

This week saw the U.S. master franchise agreement for the Coast Hotels brand reacquired by Coast Hotels Ltd. of Vancouver, a subsidiary of Japan’s APA Group. The financial terms of the deal with former master franchise holder Coast Hotels USA, LLC of Seattle were not disclosed.

The deal gives the Vancouver company a portfolio of nine franchised hotels in Alaska, Washington, California and Hawaii, and lays the foundation for its expansion through a new operating subsidiary, Coast Hotels USA Inc.

“The company aims to achieve significant growth through a combination of new franchise and hotel management contracts, mergers and acquisitions and the purchase of hotel real estate in key locations by 2027,” the company said in a press release.

The deal boosts the Coast Hotels portfolio to 29 franchised hotels across North America. It also owns six hotels in Canada and manages a further three properties in B.C. and Alberta.

“We have added five hotels this year in Canada, but for us to realize exponential growth, we obviously need to grow throughout the United States,” said Brigitte Diem-Guy, vice-president, revenue strategies and communication with Coast Hotels. “The biggest opportunity that we see as a business strategy or vision is the U.S.”

While strong pent-up demand from the pandemic continues to play out across North America as social activities normalize – ski hills, for example, are expecting strong traffic this winter now that international borders have largely reopened – the sheer size of the U.S. market makes it the place to be.

“We still have pent-up demand that we see in Canada but also the U.S.,” Diem-Guy said. “It’s quite clear that because of the volume of travel in the U.S. that the U.S. is usually faster to recover.”

While business travel remains at 75% of pre-pandemic levels and isn’t expected to fully recover until 2024, Diem-Guy is expecting the strong recovery of leisure travel to continue in 2023 despite recessionary influences.

“We don’t see any slowdown right now,” she said. “We see strong leisure demand in North America.”

Coast Hotels isn’t the only hotel operator banking on growth.

Northland Properties Ltd., which operates 62 hotels in Canada, one in the U.S. as well as four in the U.K. and Ireland, has aggressive expansion plans.

“We’re going to double our size in eight years,” Northland president Rob Pratt told the Western Canada Lodging Conference in October. “We’re bullish about 2023.”

While pent-up demand among domestic travellers may cool, he pointed to other segments of the market, including international travel and group business picking up the slack.

“Our feeling is that as the domestic/transient cools off, other sectors will increase,” he said.

While rising interest rates and operating costs continue to be a concern, the latest performance reports point to sustained revenue levels.

Revenue per available room averaged $105 per night nationally in November 2022, up 17 per cent versus November 2019. Occupancies averaged 61 per cent, led by Vancouver at 76 per cent.

U.S. figures for November also showed strong growth in revenue versus 2019, averaging US$85.74 a night, up more than 11% versus three years earlier. Occupancies declined 3 per cent, however, to 59.4 per cent.

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BoC’s increase the policy rate at seven of the eight interest rate announcement dates in 2022 | Andrew Lis

Wednesday, January 4th, 2023

Vancouver market takes ‘wait and see’ approach as Dec. sales fall 52% from year ago

The Canadian Press
The Vancouver Sun

The board attributed the decreases to the market experiencing “a year of caution” caused by rising borrowing costs and inflation.

Homes are pictured in Vancouver, Tuesday, Apr 16, 2019. Photo by JONATHAN HAYWARD /THE CANADIAN PRESS

Greater Vancouver ended 2022 with another month of prospective homebuyers taking a “wait and see” approach, which the region’s real estate board said pushed down sales by 52 per cent and prices three per cent from the year before.

“People were just waiting, waiting, waiting,” said Tirajeh Mazaheri, a Coldwell Banker Prestige Realty agent in Vancouver.

“On the buying side and the selling side, we noticed a lot less people have been motivated either to list or to purchase a property.”

She attributes much of the sluggish pace to a rapid succession of hikes to the country’s interest rate, which sits at 4.25 per cent — the highest it’s been since January 2008.

The increases, which also spark mortgage rate hikes, have weighed on buying power, even as home prices have been on a steady descent.

The result is potential buyers sitting on the sidelines awaiting further price declines and reluctant sellers holding off listing properties unless they have to move because they want the sizzling sums their predecessors scored last year.

These sentiments are borne out in figures released by the Greater Vancouver Real Estate Board on Wednesday, which revealed that December’s sales totalled 1,295. That’s about 20 per cent lower than they were in November and 38 per cent below the 10-year December sales average.

The figures contribute to the 28,903 sales made over 2022, 34 per cent lower than 2021’s total and seven per cent below 2020’s.

The board attributed the decreases to the market experiencing “a year of caution” fueled by rising borrowing costs and an ongoing battle with inflation.

“Closing out 2022, the data shows that the Bank of Canada’s decisions to increase the policy rate at seven of the eight interest rate announcement dates in 2022 has translated into downward pressure on home sale activity and, to a lesser extent, home prices in Metro Vancouver,” Andrew Lis, the board’s director of economics and data analytics, in a news release.

His board’s data showed the market’s composite benchmark price now sits at $1,114,300, a three per cent decrease from December 2021 and a 1.5 per cent decrease, when compared with November 2022.

“Because right now the prices have come down a very fair bit, people are thinking ‘OK, I’ll see a loss on my property of let’s say $200,000, but on the flip side, if I upgraded my property, I’ll get a discount of $500,000,” said Mazaheri.

She describes the people still in the market as either desperate to sell or buy or “cash ready.”

Others are pressing their luck with low-ball offers.

“If it hits, it hits and if it doesn’t, then at least they tried, but a lot of them are hitting because a lot of sellers are scared the market is going to go down further,” Mazaheri said.

Starting offers have typically been low because sellers and buyers are both trying to decipher how serious the other is about a deal given the market, added Tim Hill, a regional sales advisor for Re/Max.

Some sellers are keen to take what they can get now because they fear further price declines.

“If you’re selling in today’s market, you have to be realistic about what you’re doing,” said Hill.

Those who skipped a December transaction will have a handful of new policy changes to contend with.

The federal government implemented a two-year ban keeping foreign buyers and commercial enterprises from buying Canadian real estate on Jan. 1.

At the start of 2023, British Columbia also became the first province to require a three-day cooling-off period for buyers following the signing of an agreement to purchase a home.

The policy is meant to give buyers more time to arrange financing or home inspections, which were rushed earlier in 2022, when the market was still hot.

Mazaheri expects the policy won’t have much impact yet “because the power is in the buyers’ hands” already since sales are down so significantly.

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Archive for the ‘Real Estate Related’ Category

Calgary Finishes 2022 Strong with Price and Sales Growth: CREB

Headingley, MB,10 acres of industrial fetches $2.8 million

10.2 acres of CentrePort industrial sells for $5 million

Delivering new Metro Vancouver rentals now next to impossible

The question after a tough 2022: How much further do real estate prices have to fall?

Edmonton Aurora Polaris cannabis facility sold for $15 million

Greater Vancouver investment deals stalled in third quarter

Coquitlam, B.C., one-acre townhouse site sells for $3.2 million

Vancouver hoteliers pursue growth despite recession fears

Vancouver market takes ‘wait and see’ approach as Dec. sales fall 52% from year ago