Bank of Canada makes rate announcement

Ephraim Vecina
Mortgage Broker News

Amid an improved outlook for both the domestic economy and the global financial system, the Bank of Canada announced that it will hold its target for the overnight rate at the effective lower bound of 0.25%, and that it will be adjusting its weekly net purchases of Government of Canada bonds.

The bank rate has also been kept at 0.5%, and the deposit rate at 0.25%.

“The Bank continues to provide extraordinary forward guidance on the path for the overnight rate, reinforced and supplemented by the Bank’s quantitative easing (QE) program,” the institution said in its announcement. “Effective the week of April 26, weekly net purchases of Government of Canada bonds will be adjusted to a target of $3 billion. This adjustment to the amount of incremental stimulus being added each week reflects the progress made in the economic recovery.”

Canada’s sustained resilience despite the COVID-19 pandemic has called for these steps, although the central bank emphasized that “the recovery remains highly dependent on the evolution of the pandemic and the pace of vaccinations.”

Read more: Finder: Low-rate environment can help Canadians address high debt levels

The BoC projected global GDP to grow by just over 6.75% in 2021, around 4% in 2022, and nearly 3.5% in 2023.

“The recovery in the United States has been particularly strong, owing to fiscal stimulus and rapid vaccine rollouts,” the bank said. “The global recovery has lifted commodity prices, including oil, contributing to the strength of the Canadian dollar.”

However, while “substantial” employment gains in February and March accompanied Canada’s stronger-than-expected economic growth in the first quarter, the BoC warned that “new lockdowns will pose another setback and the labour market remains difficult for many Canadians, especially low-wage workers, young people and women.”

“As vaccines roll out and the economy reopens, consumption is expected to rebound strongly in the second half of this year and remain robust over the projection,” the Bank added. “Housing construction and resales are at historic highs, driven by the desire for more living space, low mortgage rates, and limited supply. The Bank will continue to monitor the potential risks associated with the rapid rise in house prices.”

The BoC is expecting Canada’s real GDP growth to touch 6.5% in 2021, and then moderate to around 3.75% in 2022 and 3.25% in 2023.

The Bank has scheduled its next overnight rate announcement for June 09.

 

Copyright © 2021 Key Media

B.C. restricts camping, leisure travel in crackdown

Wl Staff
Western Investor

— Campgrounds will halt bookings during latest travel restrictions. | Re/Max

B.C. Premier John Horgan said orders will be issued by April 23 that will restrict people’s ability to leave their health authorities.  The measures will continue in the May long weekend.

“At this point, non-essential travel should be limited to local travel only,” he said.

The premier reinforced Provincial Health Officer Dr. Bonnie Henry’s message from last week, encouraging British Columbians to stay in their respective neighbourhoods. 

All current guidelines and orders will remain in place. However, people will not be able to book camping spots outside of their respective health areas because the tour operator in that community will not book them. 

On April 23, Minister of Public Safety Mike Farnworth will issue orders under the Emergency Program Act to restrict people’s ability to leave their health authority.

“This will be conducted through random audits, not unlike roadside stops for a counter-attack during the Christmas season. They will be susceptible to all travellers, not just a few travellers, and again they will be random and there will be a fine if you are travelling outside of your area, without a legitimate reason,” said Horgan.

Horgan stated that BC Ferries will stop accepting bookings for recreational vehicles like campers and trailers as of April 23. It will also be contacting its passengers that have booked reservations to make sure that their travel is essential and not recreational.

Additionally, the province will be putting new border signs along the Alberta border, reminding travellers coming from outside the province, that unless they’re coming for essential business, they should not enter B.C.

Leisure travel allowed smaller hotels and motels in secondary cities to perform better than hotels in large cities that rely on international and corporate bookings, according to HVS International.  The outlier hotels and motels saw revenue per available room fall 40 per cent in 2020, but hotel revenue in bigger cities dropped by an average of 70 per cent in 2020, compared to a year earlier.

 

 

© Copyright 2020 Western Investor

What is the Tax on Unproductive Use of Canadian Housing by Foreign Non-Resident Owners?

Rachel Rehkof
other

 In March of 2021, the Canadian Real Estate Association announced that the average price for a home in Canada was now $715,300, with most provinces seeing an increase of pricing upwards of 20 percent year over year. In the midst of this record-breaking spring market, many Canadian’s anticipated that in the Federal 2021 Budget, released on April 19th.

While the budget did include major programming announcements surrounding a new federal childcare program and continuing relief for Candian’s impacted by the COVID-19 pandemic, there was minimal new policy implemented to cool the housing market.Most notably, the budget included the implementation of a new Tax on Unproductive Use of Canadian Housing by Foreign Non-Resident Owners and further action against money laundering and terrorist financing through Beneficial Ownership Transparency.We have analyzed these new program proposals to understand the impact, if any, these new policies could have on the Canadian Housing MarketThe 2021 Budget announced the federal government’s intention to implement a national, annual 1% tax on the value of non-resident, non-Canadian owned residential real estate that is considered to be vacant or underused, effective January 1, 2022.

This policy is aimed towards encouraging the productive use of Canadian housing, and avoiding homes purchased as speculative investments by non-residents sitting empty.The enforcement of this tax will require all owners of property that are not Canadian citizens or permanent residents to file a declaration explaining the current use of the property annually. Failure to file will result in a penalty. It is estimated that this measure will bring in $700 million in revenue over four years, which will be dedicated towards other investments in making housing more affordable in Canada.Before implementation, the government will undergo a consulting period with stakeholders to provide them an opportunity to comment on the specific parameters of the tax – including whether or not different rules should be established for smaller tourism and resort communities. 

Other Non-Resident Real Estate Taxes Across Canada

Many provinces have previously implemented speculation taxes targeted towards non-resident foreign investments. For instance, in 2017 Ontario implemented the The Non‑Resident Speculation Tax (otherwise known as the Foreign Buyer’s Tax). This was a 15% tax on the purchase of residential property located in the Greater Golden Horseshoe Region by individuals who are not citizens or permanent residents of Canada, by foreign corporations, and taxable trustees. This tax differs from the newly-announced Canada-Wide Non-Resident Vacant Home Tax, as it is a one-time fee charged at the time of purchase.Similarly, in 2018 British Columbia implemented a one-time property transfer tax of 20% in certain metropolitan areas for foreign nationals, foreign corporations or taxable trustees. This came in addition to a separate speculation and vacancy tax, charged annually, with a rate of 2% for foreign owners and satellite families, and 0.5% for Canadian citizens or permanent residents.While both of these programs target reducing the total number of homes sitting empty and foreign speculation in the Canadian real estate market, the previous provincial measures put a greater focus on taxing a larger sum at the time of purchase, instead of a consistent tax paid annually. 

Beneficial Ownership Transparency

In addition to new taxes surrounding foreign investments in real estate, the 2021 Budget proposes providing $2.1 million over the next two years to support the implementation of a publicly accessible corporate beneficial ownership registry by 2025. This builds upon ideas brought forth during a public consultation in 2020.A corporate beneficial ownership registry would be intended to help catch individuals who are attempting to launder money, evade taxes, or commit other financial crimes through the purchase of real estate or other activities.This policy has already begun to see positive reactions within the real estate industry. David Oikle, President of the Ontario Real Estate Association commented, “Money laundering is a multibillion-dollar problem in Ontario’s housing market, crowding out hardworking families looking to achieve their dream of one day owning a home… A beneficial ownership registry would help stop the practice of criminals using shell companies to buy up homes, giving law enforcement and government an important tool to keep dirty money out of Canada’s housing market.”Potential Impacts of the 2021 Budget on the Canadian Real Estate MarketWill this latest measure to cool too-hot-to-handle housing prices have the government’s intended effect? Let’s take a look at how previous similar measures have been absorbed by the market.

Earlier this month, Zoocasa analyzed the impact of Ontario’s 2017 Non‑Resident Speculation Tax on the Toronto Region real estate market. The report found that the initial implementation of the tax resulted in a 13% decline in real estate prices in the subsequent quarter, but prices stabilized shortly thereafter.However, it is important to note that the tax implemented in Ontario had much more significant up-front costs than what is proposed federally. Ontario’s tax is 15% of the purchase price payable on closing, whereas the new federal tax is 1% annually. This could lessen the likelihood of seeing a decrease in property values nationwide, unlike what was seen in the Toronto Region in 2017.“The purpose of this new measure is to enforce the federal government’s sentiment that Canadian real estate should be first and foremost for the end user, but it’s unlikely that it’ll have a material impact on housing affordability for this group,” says Penelope Graham, Managing Editor at Zoocasa. “It’s clear that unless current supply imbalances in major markets are addressed, upward pressure will remain on real estate prices.However, we may see a temporary lull in demand when the new OSFI proposal to stress test uninsured mortgages goes into effect, especially among the first-time buyer contingent, which is what we witnessed when this measure was first introduced in 2017.”Balances for mortgages issued to millennials fell 19.5% between Q4 2017 and Q1 2018, according to TransUnion. As well, a recent analysis by RateHub finds affordability for a family with an income of $100,000 and 20% down payment would be slashed by 5% with the new qualifying floor of 5.25%, compared to the previous 4.79% implemented in 2017.

 

© 2015 – 2020 Zoocasa Realty Inc., Brokerage

Seller claims realtor sold her Vancouver house for $425K below market value

Darryl Dyck
other

 A Vancouver property owner took her realtor to court, alleging her house was sold for $425,000 under market value.

The woman sold her house in the city’s Dunbar area in 2017, according to court documents posted this week, following a judgment in the case.

According to evidence presented in a courtroom in Chilliwack in September, the now-94-year-old seller hired a realtor that fall to sell what was one of four properties she owned in the city.

The property was initially listed by realtor Dean Macdonald, a defendant in the case along with other staff at Dexter Associates Realty, at $2,289,000, court documents say. The court heard that the asking price was based on the sale of another home in the area about three months prior.

But at that time, Macdonald hadn’t actually seen the house.

It turns out, Justice Ian Caldwell wrote in a summary of the evidence, that it was not without issues. The property had an oil tank, Macdonald told the court, and the depth of the lot was going to be reduced to make room for a widening Dunbar Street.

Still, an offer came in six days after the listing went up. Someone said they’d pay $1.9 million, subject-free, for the property.

But before Macdonald could ask his client what she thought, the offer was withdrawn.

The next day, following a discussion with the seller’s property manager, but not the seller herself, the listing price was brought down to $1,998,000. The court heard the seller appeared to agree, as she signed documents related to the reduction.

Toward the end of the month – almost three weeks after the first offer fell through – another offer came in of $1.5 million. Macdonald brought the offer to the seller, and reminded her they’d only had two offers the whole time it had been on the market.

The seller instructed Macdonald to go back to the potential buyer and ask for $1.7 million. But the counteroffer was rejected, court documents said, and the seller agreed to the first offer.

A contract was drawn up and signed, including the price and a condition the seller and buyer agreed to. The court heard these facts were not contested.

But then, after a conversation with a lawyer friend who the owner had granted power of attorney, the owner started to have doubts.

Her friend and lawyer hired someone to appraise the Dunbar property, and that appraisal suggested the market value was several hundred thousand dollars more than the sale price she’d agreed to.

The appraisal suggested it was worth $1,925,000.

Litigation counsel was hired then, as the seller and her friend felt there was a “$425,000 shortfall in the sale price.”

The sale went ahead anyway, as planned, but the seller took her realtor to court, claiming he was liable for that alleged shortfall.

Based on the written reasons for Justice Caldwell’s decision, it appears he weighed the arguments from both sides, including expert testimony.

The seller claimed her realtor failed to act in her best interest, failed to “exercise reasonable care and skill in his performance,” failed to act honestly and failed to “take reasonable steps to determine the fair market value of the property.”

She also claimed Macdonald failed to market the property in a way that would result in her getting the best price, as well as other alleged failures including that he did not put her interest before all others.

But the judge said there was no evidence before him that would prove “on a balance of probabilities” that the realtor breached any of the duties of care he owed.

“In coming to this conclusion, I cannot help but note that, as previously mentioned, the seller presented absolutely no affidavit evidence in support of this application. There is no evidence from the seller that she has any complaint with Mr. Macdonald, his actions, his advice or for that matter, the sale price of $1,500,000. There is nothing challenging what Mr. Macdonald says occurred,” Caldwell wrote.

Ultimately, he dismissed the claims against Macdonald and others at Dexter Associates Realty, and found the defendants were entitled to their legal costs.

© 2022  All rights reserved.

Top 5 Cities in Canada for Asian Property Buyers in 2020

Juwai
other

Investing in Canada is currently very appealing to foreign investments, from the taxation system, open immigration policies, a stable economy, and Canada’s leading G20 countries.

Here is a look into the top 5 cities in Canada attracting Asian property buyers in 2020.

1. Alberta

 Alberta’s economy is diversifying – a leader in energy, cleantech and agriculture, Alberta is also capitalizing on growth across the technology, financial services, aviation and logistics and tourism sectors.

Alberta’s rich history of success and growth was forged during the hard times by the tenacity and optimism of our entrepreneurs. Alberta is perfectly positioned to offer the best business environment for the next generation of entrepreneurs and business builders in an increasingly connected world.

This Canadian province has a long history of implementing policies that enable our industrial sectors to reduce emissions and environmental impacts and have made significant investments in innovative technologies.

2. Calgary

 Ranked the fifth most livable city globally, Calgary is also ranked third when finding a job.

The city with the second-highest concentration of self-employed people of major cities in Canada, Calgary’s workforce is young, diverse, and educated – also known as a top tech talent market in Canada.

In terms of real estate, the city has the most affordable rates and a higher vacancy rate than most major Canadian cities.

The city’s apartment and condo rentals are less expensive, providing people with more options to shop around. And options for families exist all over the city, with a variety of single-family homes, duplexes, and townhouses for sale and rent in the suburbs, which are available at a range of affordable prices. 

3. British Columbia

 If you are looking for communities with world-class services and long traditions of supporting resource development, the large and diverse province of British Columbia is your answer.

British Columbia range of communities from Metro Vancouver – a vibrant, modern city to the many coastal and inland communities, you are given the perfect tool to find the best location for your business.

British Columbia, Canada, has one of North America’s most competitive, flexible, and supportive business climates for those seeking opportunities or challenges. Our vast resources, low taxes, stable and well-regulated financial system and fiscally responsible government attract investment worldwide.

4. Manitoba

 Manitoba’s northern forests provide an enormous opportunity for regional and industry stakeholders who want to explore Manitoba’s vast northern forest resource’s economic, social and environmental benefits.

With good markets for forest products – including a growing bioeconomy, an underutilized wood supply in the region, a willing and able workforce, and existing infrastructure, Manitoba’s northern towns and communities are well-positioned for growth in the forest sector. 

5. Vancouver

 The city of Vancouver has become one of the driving forces behind Canada’s economy and a North American benchmark for industries such as digital design, video games and entertainment.

Vancouver has a population of over 2.5 million populace, a city of diversity and high educational level. It focused its efforts on offering the best quality of life to its residents.

 

2021 © Juwai. All Rights Reserved

Is cryptocurrency the future of the mortgage industry?

Fergal McAlinden
Mortgage Broker News

 For Shawn Allen (pictured), cryptocurrency and blockchain technology represents the future of the mortgage industry – and he’s determined that Matrix Mortgage will be at the forefront of it.

The company’s founder and principal owner told Mortgage Broker News that blockchain and decentralized finance were set to “take the whole industry by storm” as Matrix announced last week that it would accept cryptocurrency for payments of goods and services.

Read more: Alternative lender to begin accepting cryptocurrency

“If you’re not prepared for what’s to come [in terms of] automation and Smart Contracts, then you’re really going to get sideswiped with the amount of technology that’s coming down the pipeline,” he said. “I’m more confident now than ever with the market and the crypto space. I figured: it’s time to really put my foot forward and say, ‘We’re here to stay, let’s get this thing going.’”

The brokerage will accept Bitcoin, Bitcoin Cash, XRP, ETH and dollar-pegged stable coins for payments, with Allen saying that blockchain in particular – a record of transactions in the form of a digital ledger – will become increasingly prevalent in the mortgage industry in the coming years.

“CMHC [the Canadian Mortgage and Housing Corporation] is kind of spearheading that whole revolution as well, with blockchain as the public ledger,” he said. “It’s very transparent and secure, and CMHC’s blockchain initiatives [are] right in line with what we’re seeing in regards to utilizing cryptocurrency, Smart Contracts and the blockchain to transact and improve the mortgage process.

“We’re not trying to make a blockchain mortgage; what we’re trying to do is originate a qualified mortgage using blockchain. We’re using the technology to try to improve the process and shorten the sales cycle.”

Allen said that Matrix was among the first in the mortgage industry to embrace the technology, which offers the ability to verify credit, income and assets, as well as potentially registering clients with non-fungible tokens and using Smart Contracts to transact peer to peer “and eliminate the need for intermediaries.”

“There are a lot of strong use cases to make the mortgage business a lot more efficient, and mitigate against fraud,” he noted.

Embracing cryptocurrency as a payment method, a Matrix press release added, also expanded the company’s reach into international markets where credit card payments are not practical, with Allen saying that the move was equally motivated by the company’s intention to “better align ourselves with the shift towards the global adoption of digital currency.”

Some may wonder whether adoption of the currency for payments requires a sizeable upheaval of a company’s digital platforms and payment systems, but Allen emphasized that it had been a smooth transition.

“It’s just like accepting Visa or Mastercard through a regular merchant services account,” he said. “But this way, it’s received in crypto and settled into Canadian dollars in the bank account.

“It goes on the balance sheet like any other transaction, and we pay taxes on those funds, the same way we would with any other transaction.”

The company has held regular information meetings for its agents about different projects and options that are currently offered on the cryptocurrency scene, with Allen emphasizing the importance of familiarizing staff with the technology and key concepts.

Having already implemented its payment processing system for cryptocurrency, Allen said that Matrix’s next step was to build its digital infrastructure to facilitate Smart Contracts and other technology.

“The whole industry is changing,” he said. “It’s going to be interesting to see, especially with CMHC coming out and saying that they’re interested in learning more about blockchain and how to implement that.

“If people are thinking that crypto is a fad, or blockchain is not real, they’re in for a rude awakening – because it’s here to stay.”

 

Copyright © 2021 Key Media

Former CMHC boss lands top job

Tara Deschamps
Mortgage Broker News

Alberta Investment Management Corp. has named the former – and often outspoken – head of Canada Mortgage and Housing Corp. as its next chief executive.

The investment manager said Thursday that Evan Siddall will officially start in its top job on July 1.

He will succeed Kevin Uebelein, who has been AIMCo’s chief executive since Jan. 1, 2015, and will depart on June 30.

“Evan is a veteran of the financial services industry and a well-regarded executive with the skill, presence and acumen to lead AIMCo,” Uebelein said in a release announcing his successor.

“I have every confidence that Evan will lead AIMCo to even greater heights for the benefit of its clients and for all Albertans.”

In his new role, Siddall will be responsible for more than $118 billion in assets under management and investing on behalf of 31 pension, endowment and government funds in Alberta.

He will also have to restore confidence in AIMCo, after it revealed last year that it lost $2.1 billion or one-sixth of the investment returns it made in 2019 on a single public equity strategy called VOLTS – Volatility Trading Strategy.

AIMCo’s board said it was moving quickly to reduce damage from the strategy and confirmed that no other investment strategies could generate substantial losses in very unusual circumstance, but called in accounting firm KPMG to conduct an independent review.

An audit later found AIMCo’s risk management systems to be at fault and a board report said, “The breadth and depth of risk governance controls, collaboration and risk culture, while evolving and improving over the past 2-3 years, are still unsatisfactory.”

While AIMCo was dealing with the situation, Canada was plunging further into a pandemic, putting pressure on the country’s housing sector and plenty of eyes on Siddall.

He stepped down as CEO of CMHC earlier this month after serving at the federal housing agency since 2014. He was replaced by Romy Bowers, a former managing director at the Bank of Montreal.

Before joining the national housing agency, Siddall was a special adviser to the governor of the Bank of Canada.

He spent 20 years with investment banking firms in Toronto and New York and two as a senior executive with Irving Oil Limited.

At CMHC, Siddall had a reputation for being outspoken.

He triggered criticism from Realtors and their associations when he urged the industry to “call out the glorification of home ownership for the regressive canard that it is” early in his time in the role.

Realtors were quick to push back and shared surveys that proved the majority of millennials or future homebuyers were keen to own homes.

When the COVID-19 pandemic hit towards the end of his tenure, Siddall attracted attention again for forecasting the fall of housing prices and the rise of mortgage arrears.

Neither materialized and he eventually took to Twitter to acknowledge his critics.

“We never pretended to have (a) crystal ball. Nor are we all-knowing on housing,” he wrote. “We meant to contribute to a discourse, even though it was hard to be precise about future. In hindsight, we could have made that clearer.”

On Thursday, Siddall appeared to be excited about his new job.

“I am delighted to join Alberta Investment Management Corporation as chief executive officer and to further strengthen the organization’s commitment to its clients across all aspects of its business,” Siddall said in a release.

“I am looking forward to working with AIMCo’s talented team of professionals in delivering consistently superior investment performance on behalf of our clients.”

The Canadian Press

 

Copyright © 2021 Key Media

Canadian housing sees hottest month ever

Ari Altstedter
Mortgage Broker News

 The Canadian housing market hit a new record with more properties changing hands in March than any month in history, as sky-high prices lured more homeowners to try to cash in.

The number of homes sold across the country rose 5.2% on a seasonally adjusted basis, according to data released Thursday by the Canadian Real Estate Association. The 76,000 houses that were sold was 14,000 more than the previous monthly sales record set last July. Benchmark home prices rose 3.1% from the previous month, adding to a record gain in February as more supply hit the market.

The continued strength in the market comes amid a debate in Canada over whether a housing bubble is building and what policy makers should do about it. Last week, Canada’s banking regulator said it will examine whether to setup a new benchmark interest rate used to determine whether people can qualify for uninsured mortgages, and Prime Minister Justin Trudeau’s government has said it is looking to impose a tax on foreign, non-resident homeowners. Some economists have argued these steps aren’t enough, though March’s increase in supply may ease some of these concerns.

“Now is a good time to talk about pent-up supply, which may be the answer to the question everyone is asking right now,” Shaun Cathcart, the real estate association’s senior economist, said in a press release. “As the uncertainty caused and danger posed by Covid wind down, some owners who would not sell during a global pandemic will emerge with properties for sale, while at the same time some of the urgency on the demand side could dissipate.”

The increase in supply saw the rate at which newly listed properties are sold fall to 80.5% from a peak of 90.9% in January, though still well above the long-term average of 54.4%, the real estate association said. Another measure of the balance between supply and demand, the number of months of housing inventory available, was at 1.7, the lowest on record.

–With assistance from Erik Hertzberg.

 

Copyright © 2021 Key Media

Vancouver DTES 3,050-square-foot retail sites sold for $1.3 million

Western Investor Staff
Western Investor

Vancouver DTES 3,050-square-foot retail sites sold for $1.3 million

Western Investor Staff
Western Investor

Single-tenant building in Vancouver’s Downtown East Side – Strathcona neighbourhood sold for $450,000 below the asking price.

Property type: Retail
Location: 450 East Hastings Street, Vancouver
Number of units: 1
Size of lot: 3,050 square feet
Lot size in acres: 0.07 acres
Zoning: DEOD sub-area
List price: $1.75million
Sale price: $1.3 million
Date of sale: March 10, 2021
Brokerage: Corbel Commercial Real Estate Services, Vancouver
Brokers: Willow King, Marc Saul and Robert Tham

© 2021 Western Investor