Pace of housing starts surges 11% amid concerns of supply shortage

Shantae Campbell
The Vancouver Sun

Hits highest monthly level in almost a year 
Canada’s annual rate of housing starts jumped 11 per cent in September. Photo by Michelle Berg/Postmedia
Canada’s annual rate of housing starts jumped 11 per cent to 299,589 units in September from 267,443 in August, reaching its highest monthly level since November 2021.
Data from the Canada Mortgage and Housing Corporation released on Tuesday showed the rate of urban starts increased 12 per cent to 276,142 in the month while multi-unit urban starts surged 16 per cent to 216,549 units. The pace of urban starts of single-detached homes remained flat at 59,593 units.
Montreal, Toronto and Vancouver recorded large increases in multi-unit starts on a seasonally adjusted annual rate (SAAR) basis, which resulted in an overall increase in Canada, Bob Dugan, CMHC’s chief economist said in the report.

“An 85 per cent increase in single-detached units in Vancouver was offset by flat single-detached starts in Toronto and Montreal,” Dugan said, noting that starts remained elevated for the year.
Earlier this month, a CMHC report found Canada lacked the labour capacity needed to build the 3.5 million homes the agency says would be needed to restore housing affordability by 2030.

 

© 2022 Vancouver Sun

Is there a shortage of homes in Canada?

Jonathan Russell
Western Investor

Factors that are affecting Canada’s housing crisis
While it has been common to blame Canada’s houses crisis on a shortage of homes, there are reasons to believe that is not the case. One thing that is certain is there is a lack of affordable housing. Here are some things you should know about Canada’s housing crisis and so-called home shortage.
Some would argue that there is not really a housing shortage in Canada, and that the housing crisis in this country is better attributed to speculation, rather than housing shortages. A recent BMO study found that there were enough houses for everyone, even when the housing crisis was at its height. The issue was that investors were purchasing extra properties with the hopes that the prices would rise.
And while it may be tempting to blame the issue on foreign investors, BMO’s research found that many Canadians purchased second and third properties, usually to rent them out or with the aim of flipping them for profit. The result of all this is a sustained rise in prices in a short period of time—or a housing crisis (or bubble).
While Canadian banks did facilitate the crisis, Bank of Canada polices such as low interest rates further precipitated the rush to purchase properties in 2020-2021. Commercial banks, meanwhile, were mainly responding to policies set by Canada’s central bank. Interest rates have increased since 2021 and commercial banks are required more and more to scrutinize buyers’ finances prior to approving mortgages, meaning it is unlikely that banks will, ultimately, cause a housing market crash.
Building more houses is not a solution—affordability might be
One of the major housing issues facing Canadians is that it is a basic human right and a commodity that people and entities profit from, according to a research paper released by the University of Waterloo’s urban studies department. For this reason, for-profit developers would be happy to build more premium-priced homes—it is where the largest profit margins are.
It is also why Canada’s housing market needs more affordable housing rather than simply more housing. Toward that end, some proposed governmental solutions include open-ended grants and subsidies for both homebuyers and homebuilders, who will build and attempt to purchase the homes dictated by the for-profit housing market. 
Another proposed solution is known as up-zoning, which would do away with zoning rules requiring that a recently demolished home be replaced by a single-family dwelling, to maintain the aesthetics of the neighbourhood. The proposal would encourage building more types of houses, including townhouses, laneway homes, triplexes, and low-level apartments. Some argue, however, that rather than helping low-income families find affordable housing, the practice of up-zoning instead resembles gentrification.
Factors that impact the housing market in Canada
While a shortage of housing in Canada has often been blamed for the housing crisis, that mentality is now being challenged. Housing affordability is also commonly viewed as being a major factor. Home prices outpacing wages by about 50% in the past seven years have been cited as another factor in Canada’s housing crisis, as have fluctuating interest rates.
The housing crisis is no longer a homebuyer’s problem
The housing crisis in Canada is no longer simply a homebuyer’s problem—it is becoming a major issue for homeowners as well. House prices in Canada have, for most of the last decade, been rising more quickly than incomes. For instance, home prices have risen nearly 50% more quickly than wages since 2015. That essentially means that over the last seven years Canadian homes have become even more unaffordable.
In 2022, however, home price gains have been reversing, with property prices falling from their February peak by 18.5%, or $150,000. While that may be better for homebuyers, particularly homebuyers hoping to enter the housing market, it is creating problems for homeowners, who are seeing their net worth drop. Plus, anyone who has a mortgage with an interest rate that changes, otherwise known as a floating mortgage, are facing rising interest payments, as well.
In other words, the housing crisis in Canada is not only a problem for first-time homebuyers who are being forced out of the market by skyrocketing prices—homeowners are also feeling the pressure due in large part to rising interest rates.

Copyright © 1996-2022 KM Business Information Canada Ltd.

Sim elected new mayor of Vancouver in a landslide vote

Frank O’Brien
Western Investor

Ken Sim, a novice politician, is the first Chinese-Canadian elected as mayor of Vancouver.

Ken Sim thanks supporters in his election victory speech Oct. 15 in Vancouver. | CTV screen shot

Ken Sim was elected the new mayor of Vancouver in a landslide vote October 15.

 A Vancouver businessman who had never held a political post, Sim received the majority of votes, with 47.93 per cent. Incumbent Vancouver Mayor Kennedy Stewart followed in second, with 16.68 per cent of the total votes.

Sim and his ABC Vancouver party have promised to hire 100 officers, 100 mental health nurses and reinstate the police school liaison program. ABC says it will support a VPD graffiti abatement program and wants police officers on patrol to wear body cameras.

Sim’s party says it will also create a task force to address the dramatic rise in anti-Asian, anti-Semitic and anti-Indigenous hate crimes.

Vancouver’s new mayor is the co-founder of Rosemary Rocksalt Bagels and Nurse Next Door.

 

© 2022 Western Investor

Less than acre of Surrey multi-family land sells for $6.5 million

Western Investor Staff
Western Investor

The 0.97-acre parcels is in the Fleetwood area, close to the planned 152 Street SkyTrain station.

Frontline Real Estate Services, Surrey, B.C., for Western Investor

 

Property type: Development land

Location: 15316 88 Avenue, Surrey

Zoning: Designated residential multifamily

Sale price: $6.5 million.

Brokerage: Frontline Real Estate Services Ltd., Surrey, B.C.

Brokers: Megan Johal, Adam Lawrence, Justin Mitchell.

 

© 2022 Western Investor

CMHC makes huge house price drop prediction

Tara Deschamps
other

However, the fall will do little to improve affordability

Canada Mortgage and Housing Corp. is predicting housing prices will continue to drop in 2023, but is warning the fall will do little for affordability.

Patrick Perrier, the housing agency’s deputy chief economist, said in a report Thursday that he expects the national average home price to fall 15% from $770,812 – the peak seen in the first quarter of this year – by the end of the second quarter of 2023.

On an annual basis, he sees prices growing 2.6% in 2022 compared with 21.3% in 2021 and then, declining 6.3% in 2023 and rising 2.1% in 2024.

Perrier attributed the moves to housing demand slowing as interest rates rise.

Despite the price decline, Perrier believes housing affordability will not improve because any benefits that can be reaped from lower prices will be offset by higher interest rates and combined with an increasingly competitive rental market.

“Those who are current renters that were planning to purchase a house, they won’t be able to do it, so they’ll stay in the rental market,” Perrier said in an interview.

“And unfortunately, we might see others that are currently owners that, because of deterioration in their employment and income conditions, might have to sell and go on the rental market.”

Thus, Perrier said less demand and pressure in the ownership market will transfer to more demand and pressure in the rental market.

To make the housing markets for affordable, he feels more supply is needed and it needs to come quicker to keep pace with demand and take pressure off pricing.

Perrier sees the lack of affordability occurring as the country heads into a recession by the end of 2022, but added that the downturn will not be as severe as the last and a recovery will begin in the second half of 2023.

In a separate report, Royal LePage lowered its home price expectations on Thursday. It sees prices in the fourth quarter decreasing compared with the same quarter last year and erasing the gains made at the start of 2022.

The real estate brokerage’s new outlook is based on a survey that predicted the aggregate price of a home in Canada in the final three months of the year will drop 0.5% compared with the fourth quarter of 2021.

That’s down from a July forecast that predicted prices in the fourth quarter to be up 5.0% on a year-over-year basis.

Because home prices follow sales volume trends, Royal LePage CEO Phil Soper expects to see further softening in the final months of the year.

“September did not bring the typical seasonal lift in the number of homes trading hands in this country, a clear indication that our housing market continues to adjust to higher borrowing costs,” Soper said in a statement.

“Our revised outlook has national prices at just below where we ended 2021, erasing the gains made in the first quarter of 2022.”

 

Copyright © 1996-2022 KM Business Information Canada Ltd.

Canada home prices fall again

Fergal McAlinden
other

 

September marked the seventh successive month of declining prices

Canadian home prices were down again in September, marking a seventh consecutive month of decline as they dropped nearly 9% below their March peak.

New data from the Canadian Real Estate Association (CREA) showed that the benchmark price of a home in September was $766,000, a fall of 1.4% from August, with the Greater Toronto Area (GTA) accounting for an especially significant decline.

That’s in stark contrast to other cities including Calgary and Ottawa, which both posted higher benchmark prices in September than the previous month.

Prices in a red-hot housing market skyrocketed in Canada during the first two years of the COVID-19 pandemic, before dipping in recent months amid a series of rate hikes by the Bank of Canada and notably lower purchase activity.

Read next: What’s next for Toronto’s once-sizzling housing market?

Home sales in September decreased by 3.9% compared to the previous month, CREA said, with year-over-year sales slipping by a full 32.2%. That meant September sales were around 12% lower than the pre-pandemic 10-year average for that month.

CREA’s senior economist Shaun Cathcart said in remarks accompanying the news that it was important to remember the market remained in the middle of “a period of rapid adjustment” with buyers and sellers both trying to “feel each other out” while many people stepped back from their plans to buy a house.

“Resale markets may remain on the quiet side for some time yet,” he said, “with the flipside of that coin being even more pressure on rental markets.”

Despite the cooling housing market and falling prices, there’s little indication that the Bank of Canada will change course on its rate-hiking trajectory of the year to date, with a jump of at least 0.5% expected in its next announcement.

 

Copyright © 1996-2022 KM Business Information Canada Ltd.

Canada home prices fall again

Fergal McAlinden
other

Rezoning application prepped for key Broadway site

Peter Mitham
The Vancouver Sun

Two rental towers are proposed for the site of MEC’s former flagship store at 130 West Broadway in Vancouver under a rezoning application set for submission in November.Colliers International

Two rental towers of up to 29 storeys will be proposed for the site of the former Mountain Equipment Co-op flagship store at 130 West Broadway in Vancouver under a rezoning application being prepped for submission next month.

“The proposal would include two secured rental towers (28-29 stories in height) on top of a commercial podium comprised of childcare, retail, restaurant and fitness space, a public park, and below-grade parking,” stated a letter developers Reliance Properties Ltd. and QuadReal Property Group distributed to neighbours earlier this month.

The letter says the proposal conforms to the recently approved Broadway Plan, which envisions “a mix of housing, job space, public amenities, and streetscape improvements including an active public realm” for the site.

“The design … is not that much different from the one we drew up back in 2017, 2018. It’s just that we couldn’t move it forward because it couldn’t be supported under the existing zoning,” said Jon Stovell, president of Reliance, which acquired the site in 2015. “It required the Broadway rezoning policy to be supported under that form or height.”

Previous proposals always envisioned rental housing on the site, but the scale was impossible prior to the Broadway Plan’s approval in July. Now that letters of inquiry and rezoning applications are permitted, Reliance and QuadReal are moving forward to submit a rezoning application for consideration by the new council.

“We pursued, for a long time, various options under a secured market rental or Rental 100 type of application,” Stovell said. “But neither we nor the city was very happy with the outcome that could be supported by the existing zoning, and everybody decided that it would be better to wait until there was a clearer pathway to what could be done with the site.”

Given the amount of work undertaken on previous proposals for the site, Reliance and QuadReal are moving directly to a rezoning application rather than submitting a letter of inquiry first.

While the Broadway Plan doesn’t require developers to consult with the community prior to submitting an application, Reliance and QuadReal are doing so to avoid surprises during the approval process.

“As with all our projects, the partnership is committed to each community in which we build, and we strive to gain an understanding of and hopefully address our neighbours’ priorities and concerns through open dialogue,” the letter to neighbours stated. “With this in mind, we would look forward to a conversation with you as our neighbour.”

“We’re doing the next best thing, which is to try and inform immediately impacted neighbours of what’s coming,” Stovell said.

The city has told Stovell that more than 60 letters of inquiry have been received for properties since approval of the Broadway Plan in July. By moving directly to rezoning, 130 West Broadway is potentially one of the first projects set for completion under the new plan.

The exact timeline will depend on the length and success of the approval process, which remains lengthy. It’s safe to say construction won’t begin before 2024, however, a year before the Broadway Subway Project is set to open.

Redevelopment of the block will add life to a block dominated by what Stovell described as “the ultimate white elephant building,” a former car dealership-turned-big box store that has sat largely vacant since MEC vacated it for a new flagship store in the Olympic Village in 2020. The current building is 52,486 square feet.

“This application has zero displacement of existing rental residential, which is one of the main bugbears and complaints of the Broadway Plan,” he said. “Literally nothing will be lost. It’s just a dead block right now.”

 

© 2022 Western Investor

Surrey 1.76-acre site on Highway 10 fetches $4.4 million

Western Investor Staff
Western Investor

Eyed for residential development, the site is close to amenities in the Panorama area as well as Highway 91 and 99.

Frontline Real Estate Services, Surrey, B.C., for Western Investor

 

Property type: Development land (residential)

Location: 14238 Highway 10, Surrey, B.C.

Sale price: $4.4 million.

Brokerage:  Frontline Real Estate Services Ltd., Surrey, B.C.

Brokers: Megan Johal, Adam Lawrence, Justin Mitchell.

 

© 2022 Western Investor

Saskatchewan 673 acres sells for $1.91 million

Western Investor Staff
Western Investor

The farmland, made up of four contiguous properties in RM of Edenwold, sold for $311,00 over its list price.

C&C Realty, Regina Beach, Saskatchewan, for Western Investor

 

Property type: Farmland

Location: Section 34-20-17 W2 in the Rural Municipality of Edenwold, Saskatchewan.

Sale price: $1.911 million

Brokerage: C&C Realty, Regina Beach, Saskatchewan.

Broker: Chris Vogel.

 

© 2022 Western Investor