Speculation and Vacancy Tax

Staff
other

Vancouver ranked world’s second-least affordable housing market?again

Alissa Thibault
other

City of Toronto Had Nearly 2,000 More Condo Apartments For Sale at the End of 2020 Compared to 2019

Janine Rane
other

Changing lifestyle priorities in the face of COVID-19, coupled with historically low interest rates resulted in a record breaking year for real estate in Canada. Statistics Canada noted in a new report on population growth across sub provincial regions that “more people are opting to live outside of Canada’s largest urban centres, which is contributing to ongoing urban sprawl.” 

This trend played out across the GTA too, where home sales ended the year on a high, and single-family homes were in highest demand with many home buyers putting a premium on space and access to the outdoors. On the flip side, demand for condominium apartments in condo dense cities like the City of Toronto slowed with the average price noting a slight dip; a stark contrast to December 2019 when prices were up 10% year-over-year (y-o-y), demand for condos was soaring, and bidding wars were common. 

For this report, Zoocasa took a closer look at condo market activity in 35 neighbourhoods across the City of Toronto to understand demand and supply trends across the city. We compared the number of active listings for condo apartments (the inventory of available condos) across these neighbourhoods at the end of  December 2020 to December 2019. We also calculated changes in the median condo apartment price – the price at which half the condos that sold, sold for a higher price than the median and where the other half sold for a lower price than the median price. 

Overall, the City of Toronto had 1,972 more active listings for condo apartments in December 2020 compared to the year prior. With 3,120 active condo listings available in the City of Toronto at the end of December, this represented a 172% increase y-o-y or 2.7x more active listings than at the end of December 2019. 

 

Downtown Neighbourhoods Had 3.2x to 3.4x  More Condo Listings Than Last Year

 

Taking a closer look at neighbourhoods across the City of Toronto, Zoocasa found that the parts of the city with the highest concentration of condo apartments experienced the most significant increase in active listings on a y-o-y basis. 

At the top of the list is Toronto’s C01 neighbourhood – spanning Downtown, the Entertainment District, CityPlace, and Liberty Village – which saw a whopping 219% increase or 3.2x more active listings at the end of December 2020 compared to the previous year. Specifically, there were 989 active listings in C01 in December compared to 310 in December 2019. The median sales price dropped 9% or -$58,750 to $611,250. 

According to Anthony Tomasone, a Zoocasa real estate agent in Toronto, the drastic increase in condo inventory in C01 is notable. Tomasone says, “in 2019, C01 was one of the most competitive neighbourhoods in the city. Seeing new listings double, and active listings triple in the span of a year is a testament to the impact that COVID-19 has had on homebuyers in the short run.”

Behind C01 for increases in condo apartment inventory is Toronto’s C08 neighbourhood, encompassing Regent Park, St. James Town, and Corktown, where the median home price dipped 10% to $597,500 y-o-y. There was a 239% increase in active listings compared to December 2019, with 315 or 3.4x more active listings available in the neighbourhood at the end of December 2020. 

Of the top ten neighbourhoods with the greatest increase in active listings at the end of 2020, both C01 and C08 noted the biggest annual decline in the condo median price. 

Rounding out the top three is C15, the area that includes Hillcrest Village and Bayview Village, where despite a 156% increase in active listings, median home prices remained relatively steady – posting a 4% increase to $531,000. 

“For buyers that are looking to get a foothold into the market and thinking about the long term, now might be a good opportunity to consider a condo, particularly in the downtown core. Compared to the same time the year before, buyers have more options and less competition, better prices, and lower interest rates – all favourable conditions for first-time buyers that may otherwise have been priced out of the market,” says Tomasone. 

Check out our infographic below that highlights active listings and median prices in December 2020 for 35 Toronto neighbourhoods compared to December 2019. 

 

© 2015 – 2020 Zoocasa Realty Inc., Brokerage

Vancouver home sales soar 67% in January?s first half

Sean MacKay
Livabl

The Vancouver region housing market shattered a sales record in December to cap off an incredible rebound in the second half of 2020.

Moving into the first month of a new year, all eyes are on the resale market to see if it can maintain its head-spinning velocity or if it’s set to come off the boil.

 

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With mid-month resale figures released by local brokerage Dexter Realty, we can now confidently say it’s looking like the heat won’t be letting up anytime soon as homebuyers have been scooping up properties at a relentless pace.

According to Dexter Realty Managing Broker Kevin Skipworth, home sales in the first 15 days of January — at 977 units — are up 68 percent from the number of transactions recorded during the same period a year ago. When compared to January 2019, they’re up 147 percent.

“In 2019 we were saying buyers are needed! This year much like last year, it’s sellers that are needed!” Skipworth wrote in an email sharing the January mid-month figures.

If buyers took any kind of break during the holidays, they sprung back into action in the New Year with no delays.

And, as Skipworth alluded to, supply currently on the market is far from enough to satisfy the current level of demand present in the Vancouver region. The mid-month data showed that there were 270 fewer active listings available in the first 15 days of January 2021 compared to the same period in 2020, when demand was much less intense.

“This is going to put pressure on prices to rise and continue the pattern of multiple offers,” Skipworth wrote.

“The typical market dynamic of sellers not wanting to list for fear of having to compete for their next home or fear of not finding it in time for when they have to leave the home they sold is unfolding as 2021 takes off,” he added.

 

@2020 BuzzBuzzHome Corp.

Ian Mulgrew: Fear-mongering at the money-laundering inquiry

Ian Mulgrew
The Vancouver Sun

Opinion: President of the ATM Industry Association says RCMP report and testimony claiming ‘white-label’ ATM machines being used extensively to wash drug money are ‘devoid of any evidence’

“White-label” ATMs are cash machines not operated by Canada’s banks or credit unions. Across the country, there are about 50,000 such machines. Photo by Nick Brancaccio /Windsor Star

Chris Chandler found himself growing more and more uncomfortable during testimony last week at the B.C. Commission of Inquiry into Money Laundering.

As veteran RCMP expert Melanie Paddon explained how generic ATM cash machines were being used to wash huge amounts of dirty money, Chandler couldn’t believe his ears.

By the time the Joint Illegal Gaming Investigation Team member had finished, Chandler, the president of the ATM Industry Association, told Commissioner Austin Cullen he needed a moment.

“I’m honestly … I’m just having a hard time controlling myself. Both the report (Paddon read from) and Ms. Paddon’s testimony … are completely devoid of any evidence that people are actually money-laundering through ‘white-label’ ATMs. So I really struggle with this.

“When I look at the estimate provided — $300 million to $1 billion per annum — firstly, that’s a report from 2008 … so by my math in the 13 years since this report was published there should have been $4 billion to $13 billion laundered through white-label ATMs, it seems to me either that number is completely dead wrong or we have a terrible enforcement problem.”

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He paused: “I’m really struggling to compose myself, frankly.”

What are known as “white-label” ATMs are cash machines not operated by Canada’s banks or credit unions. Across the country, there are about 50,000 such machines, which began to spring up in 1996 when the competition bureau ended the banks’ monopoly.

Paddon used the 2008 report to support her claim that criminals could stock white-label ATMs with drug money in order to launder it, and that the machines didn’t require users to have an official relationship with a bank. They could also be used to skirt financial-system safeguards, she said.

“There’s no government oversight in what’s going on when the criminal places the money in the system. They’re not reporting directly to (the Financial Transactions and Reports Analysis Centre),” Paddon noted.

White-label ATMs are “an ideal method” for laundering significant amounts of money for Hells Angels and other drug-trafficking organizations, she maintained.

“Investigations and intelligence files indicate individuals associated with organized crime groups currently control approximately five per cent of white-label ATMs in Canada. If other information is substantiated, the number of white-label ATMs used or controlled by organized crime to launder proceeds of crime could reach 20 per cent of all the ATMs.”

Chandler choked on those figures.

“In 10 years of lobbying for this industry, that (2008 report) has been kept from me,” he told Cullen. “No one has provided it to me until now, and I would put to you the reason for that is because it is completely devoid of context and it’s completely devoid of evidence that people are doing this in large dollars.”

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The commission has heard plenty of hyperbole about money-laundering in casinos, about professionals such as accountants aiding and abetting criminals, and the incredible risk posed by lawyers’ trust accounts and their pesky privileged solicitor-client relationships.

But, as Chandler complained, the evidence is jello and convictions a will-o’-the-wisp.

Was Paddon aware of any investigations or prosecutions that show this occurring and support the catastrophic-sounding numbers?

“No, I am not,” she conceded. “Um, I had an investigation I recently worked on, I can’t give you details, and I can’t tell you exactly how much money was pushed through these ATMs…”

Chandler was incredulous.

“I haven’t figured out what caused that leap of the imagination,” he fumed. “If the 2008 report (numbers) are correct, it would imply that $4 billion to $13 billion (has been laundered). But there has only been one charge, in 2014 (in Winnipeg), involving six ATMs (and a total of $100,000). It is just beyond comprehension.”

Chandler noted that owners of white-label ATMs are subject to criminal checks as well as the “know your client” bank processes and documentation. Each ATM must settle up with a single bank account that is subject to all financial regulations.

He said that using a night-deposit box, a bank ATM or a teller was no different than using the white-label ATM.

“It is impossible for a merchant to keep a second set of books,” he emphasized. “For me to then see a 2008 report from the RCMP with all this conjecture and innuendo and implication about billions of dollars, there is just some giant disconnect somewhere.”

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The federal and provincial governments have established one of the most extensive and expensive data-collection systems in the world, demanding large volumes of reporting, mostly to FINTRAC — which receives almost 10 million more reports a year than its U.S. counterpart.

Yet there are no reliable estimates for the cost of compliance with the money-laundering regime or its cost-effectiveness. No one knows whether the system is working or not.

Still, the sky-is-falling rhetoric dominates and police insist they need more tools and powers to infringe even further on privacy and civil rights.

Asked what would happen if ATM owners were forced to have armoured-car companies deliver the cash to restock machines, Chandler warned:

“A merchant who may be generating $100, $200, $300 a month (from an ATM) for his store, restaurant or bar may suddenly be making $20 or $30 a month and no longer feel that is an appropriate use of the space, and he could generate more money selling potato chips or whatever. I think the impact would be really felt mostly by the Canadian consumer who would suddenly find 40 per cent fewer places for people to get their cash.”

The money-laundering commission’s hearings continue online.

 

© 2021 Vancouver Sun

Condo market is up with sales surging 90% y-o-y on the MLS on the first two weeks of January 2021

Neil Sharma
Canadian Real Estate Wealth

Top Ontario real estate developments in 2020

Mark Weisleder
other

So many of us are happy to put the year 2020 behind us and look forward to a better 2021. Still, there were positive developments in the real estate industry in 2020 that we should all be grateful for. Here they are:

 

1. Real estate was designated as an essential service by the provincial government.

 

Not many realize it but there was a brief period in March of 2020 when the province of Ontario was considering closing down the entire real estate industry, meaning that no agreements of purchase and sale could be completed and registered until the end of the pandemic. This did not happen, partly because the real estate industry, the law society and law firms took the lead to make sure that properties could still be sold safely and then closed safely, with minimal client interaction.

 

2. Making lemonade out of lemons

 

Although the pandemic presented all kinds of initial hardships on trying to close real estate deals safely, law firms quickly adapted to signing clients up on Zoom calls, transferring money between law firms digitally, exchanging closing documents electronically by e-mail and using lockboxes to transfer keys on closing, all with the effect of minimizing client contact. Even when the pandemic ends, it is hoped that these processes will be continued to make the practice of real estate law more efficient. It also seems that one of the final aggravations and arguments between law firms, about which client pays the $17.50 wire fee, has been decided by the law society. Amen to that.

 

3. Real estate agents were given the right to incorporate.

 

This was a major development for real estate agents in Ontario, as they have now been recognized as true professionals and can take advantage of tax benefits of incorporating their businesses, similar to doctors, lawyers and accountants. Our law firm has already assisted over 200 real estate agents in completing their incorporation, including complying with all requirements of the Real Estate Council of Ontario.

 

4. It is more difficult to sell a home occupied by a tenant during a pandemic.

 

As many of you know, it was not easy to evict a tenant even before the pandemic when trying to obtain vacant possession to close your real estate agreement. The effects of the pandemic have made this process even harder. The province has now suspended all evictions during this latest lockdown period. Unfortunately this has allowed tenants to take advantage of these delays. Some tenants have demanded one year’s rent as compensation to leave in a timely manner, even when the landlord seller properly served the eviction notice and the buyer was intending on moving into the property on closing. My advice to real estate agents is now make a deal with the tenant first to find them another place to live, pay any incentive now and then once the tenant vacates, put the property up for sale. Then there will be no delays in showings, ability to stage, selling and closing.

 

5. Real estate lawyers working together more to solve problems.

 

I have noticed in the past year that while there may be on average the same number of “difficult” real estate deals, whether it is buyers needing extensions due to mortgage issues, resolving title problems, assisting with the typical damages or missing chattels discovered at the final walkthrough by the buyer, there is a less adversarial nature going on, as real estate lawyers are doing our best to try and resolve problems amicably. Maybe we are just more grateful for what we do have, even if the file is aggravating.

 

From my partners and staff at Realestatelawyers.ca LLP, I wish you all to be healthy and stay safe and a very successful 2021.

 

Mark Weisleder is a senior partner with the law firm Real Estate Lawyers.ca LLP and is also an author, newspaper columnist and keynote speaker. He has practised real estate law for over 30 years and has written best-selling industry books for homebuyers and sellers, residential landlords and real estate salespeople. Reach him at [email protected].

 

Photo credit /  Pict Rider ISTOCKPHOTO.COM

 

Interested in writing for us? To learn more about how you can add your voice to The Lawyer’s Daily, contact Analysis Editor Peter Carter at [email protected] or call 647-776-6740.

Related Articles

• Encourage compromise when selling home occupied by tenant
• Why Ontario landlord-tenant relations not doomed by Bill 184
• Closing real estate deals during COVID-19
• Seller refusing final visit before closing due to COVID-19: Now what?
• Modernizing how real estate is sold: Counting the ways

 

 

© 2021 LexisNexis Canada

Pandemic housing boom means affordability is no longer just a big-city problem

Erica Alini
The Vancouver Sun

Ocean-view residential development near Port of Prince Rupert looking for investors

WI Staff
Western Investor

Photo via District of Port Edward — District of Port Edward

 

The District of Port Edward has recently released a Request for Proposals inviting submissions from experienced developers for a 7.25 acre ocean view residential development on Alder Avenue, in Port Edward, British Columbia.  The seaside community of Port Edward is located in Porpoise Harbour, near the rapidly growing Port of Prince Rupert.  The size and location of this property offer a uniquely strategic opportunity in a high demand housing market.

Source: Image via District of Port Edward

The RFP is inviting submission of non-binding proposals for the purchase of this property, design of a residential development and construction of single and multi-family homes.  The successful respondent will be invited to proceed with negotiations for the first phase of the Alder Avenue residential development.

A copy of the RFP is posted on the District website at www.portedward.ca/news/news-releases.

 

Copyright © 2020 Western Investor

Speculation tax a failure, critics contend

Andrew Duffy &Wl Staff
Western Investor

— House prices in Metro Vancouver have increase 10.2 per cent in the last year. | WI files

While popular  – and profitable for the provincial government – B.C.’s two-year old speculation tax and vacancy tax has not met its goals of reducing urban home prices or increasing the supply of affordable rental housing, critics say.

The Ministry of Finance said in a statement January 12 that the tax, which raised $88 million in 2019, resulted in some property owners repurposing formerly vacant properties into rental units.

 “This change in behaviour, and the tax continuing to capture speculators while exempting almost all British Columbians, shows this tax is working for the people of our province,” Finance Minister Selina Robinson said in the statement.

But housing experts doubt that the tax has had much effect on either the rental market or affordability.

Casey Edge, executive director of the Victoria Residential Builders’ Association, said a Canada Mortgage and ­Housing rental housing report suggested the rental vacancy rate in Greater Victoria dropped to 1.0 per cent in 2019 and that in 2020 any small improvement in the rate was due to university and college students staying home during the pandemic instead of moving into the region.

Edge also pointed out ­housing prices are not moderating, but have been increasing, and the average price of a single-detached home in the Victoria region last month was $992,202 up from $899,782 in December 2019.

In Metro Vancouver, the benchmark price of detached house in December 2020 was $1.5 million, a 10.2 per cent increase from December 2019.

Edge said that flies in the face of the minister’s assertion the tax “has contributed to the ­ongoing moderation of the ­housing market and has not negatively impacted housing supply.”

Brendon Ogmundson, chief economist with the B.C. Real Estate Association, said the impact of the tax on affordability in the ownership market was temporary at best.

“After the remarkable events of 2020, demand in the market is on a record pace while the supply of homes available for sale closed the year at a record low,” he said. “That imbalance of demand over supply means that prices are rising dramatically.”

Last year, the real estate association released an analysis of the tax, which suggested its effect on the rental market was only noticeable in Metro ­Vancouver, and even there it was impossible to determine if the increase in the number of rental properties was due to the provincial tax or the municipal Empty Homes Tax and short-term rental regulations that were implemented around the same time.

The tax, introduced in the February 2018 budget, applies in Greater Victoria, Nanaimo, Lantzville, Metro Vancouver, the Fraser Valley, Kelowna and West Kelowna.

The idea behind it was to reduce the number of empty homes and help deal with B.C.’s shortage of affordable housing by encouraging owners of vacant units to put them into the rental market or sell them.

The ministry notes less than 1 per cent of British ­Columbians have to pay the tax as it applies to largely to foreign owners, satellite families (where the majority of their worldwide income is not declared on a Canadian tax return), Canadians from outside B.C. and other non-B.C. resident owners.

The ministry says the $130 million the tax has raised province wide since 2018 goes toward funding housing, shelter or rental initiatives in the five regional districts where the tax applies.

The tax rate is two per cent of a property’s assessed value for foreign owners and satellite families and 0.5 per cent for Canadian citizens or permanent residents.

Owners are exempt from the tax if it is their principal residence, they rent it at least six months of the year, they are disabled, the property was just inherited, it’s valued at less than $150,000, or a person was away and it was vacant due to medical reasons, residential care, work or spousal separation.

The introduction of a speculation tax targeting foreign and domestic homeowners who pay little or no income tax in British Columbia, and those who own second properties that are not long-term rentals, is endorsed by 77 per cent of B.C. residents, according to a mid-2020 poll conducted by Research Co. and Glacier Media.

 

© Copyright 2020 Western Investor