Metro Vancouver markets saw home price declines in Q3

August 23rd, 2022

Sunshine Coast, Squamish buck trend of lower home prices

Jeremy Hainsworth
Western Investor

High-priced Vancouver’s West Side and West Vancouver also out-perform three-quarters of Metro markets

 Detached house prices on the Sunshine Coast of B.C. are holding steady, Re/Max study finds. | Western Investor

While three-quarters of Metro Vancouver markets saw home price declines, detached house prices on the Sunshine Coast and Squamish held steady from the first quarter to the second quarter (Q2), a new Re/Max Canada report says.

High-priced West Vancouver and Vancouver’s west side are also bucking downward price trend, according to the 2022 RE/MAX Hot Pocket Communities Report released August 18, which looked closely at municipalities across the Metro Vancouver region.

“Buyer sentiment changed virtually overnight as growing geopolitical concerns and spiralling inflation destabilized global markets, leaving the Bank of Canada little option but to raise interest rates,” says Christopher Alexander, president at Re/Max Canada, in a statement. “Those fast and furious incremental increases placed downward pressure on housing sales and prices, improving affordability on one hand, but eroding it on the other.”

The report said while detached housing values showed substantial year-over-year gains in the first half of 2022, successive increases to the Bank of Canada’s overnight rate put a damper on price appreciation in the second quarter of the year in both the Greater Toronto and Vancouver regions.

The central bank surprised market watchers July 13 with a hike of 100 basis points, bringing its target for the overnight rate up to 2.5 per cent.
Re/Max said at the time it was the bank’s biggest move since 1998, and the fourth in a series of increases expected for 2022, as the bank tried to tamp down the soaring inflation rate.

The study found core markets in Vancouver’s west side and West Vancouver/Howe Sound bucked the downward price trend in terms of preliminary estimates of Q2 median values, posting increases of 2.4 per cent and 8.2 per cent, respectively. 

Further north, Squamish and the Sunshine Coast also held steady, with no value changes reported between the first and second quarters.

The current benchmark price of detached house on the Sunshine Coast is $997,000 and it is $1.78 million in Squamish, according to the Real Estate Board of Greater Vancouver. This compares with more than $3.3 million in both Vancouver’s west side and West Vancouver.  

Re/Max found that 75 per cent of Greater Vancouver markets experienced a downturn in second median values, coming off peak levels reported in 2022’s first quarter.

Most of the declines reported were below 10 percent, with one outlier — Whistler/Pemberton, which fell by just over 16 per cent.

In the Fraser Valley, percentage declines in average price ranged from a low of just over 3 per cent in Langley to a high of close to 13 per cent in Delta-North between the first and second quarter.

The report found Burnaby, Coquitlam and Port Coquitlam to be among Metro Vancouver’s most durable areas.

These established communities are drawing purchasers who are looking for affordable detached housing with good accessibility to the downtown core, with preliminary estimates of the Q2 median values ranging from just $1.44 million in Port Coquitlam to $2.12 million in Burnaby.

North Vancouver and Squamish have also held up well, with both experiencing rapid growth well before it was further accelerated by the pandemic.

The report said market shifts could be good for condo owners looking to jump to a detached home or detached owners looking to upsize.

The report explained that the ‘spread’ — the difference between an existing property’s selling price and the purchase price of a new one — has narrowed. So, with mortgage portability, the move can work in favour of the buyer.

“Condominium and strata owners have also seen benefits in the ‘spread’ as values for their apartments and townhomes have remained relatively stable, while detached housing values have softened,” the report said.

 

© 2022 Western Investor

Here are a few possible reasons why townhouses can be hard to sell

August 22nd, 2022

The top five reasons townhouses are hard to sell

Jonathan Russell
other

The top five reasons townhouses are hard to sell

 Townhouses are an attractive option for anyone looking to buy a home quickly, usually young families. But while purchasing a townhouse may make sense, there are things to consider a little further down the line, such as reselling and appreciation. Here are five reasons why townhouses can be hard to sell.

Townhouses are usually individually owned but share walls with other homes. They are often seen as inferior to single-family homes and are therefore considered less valuable. The value of a townhouse is, however, dependent on the structure of the building as well as location. Thanks to updated designs, some townhouses are becoming more appealing, especially for small families who are looking to purchase a home for the first time. Why, then are townhouses hard to sell? Here are a few possible reasons.

Less desirable on the market. Townhouses are somewhere between single homes and condos on the market, since you usually own the whole house (often two floors) but still share walls with at least one neighbour, if not two. That means townhouses share the disadvantages of both single homes and condos. Most families want to purchase a single home for the yard and fence their kids and pets. Single people or young couples usually want to live in a condo for the downtown location and facilities. It is a cheaper option than buying a townhouse.

More competition with single attached homes in the area. One reason it is more difficult to sell a townhouse versus a single-family home, for instance, is the competition for other homes in the neighbourhood. To avoid overpaying, homebuyers usually seek houses for selling and compare the prices, the reason being that homes in the same area have the same floor plan, square footage, and location.

In other words, you will have less of an opportunity to sell your home fast if there is a motivated seller in your neighbourhood who drops the price for a faster sell. However, for a higher price, you will likely be able to sell a single home since there are fewer immediate comparable properties on the market with the exact floor plan and size. Because your floor plan, decoration, and yard will be more unique, you will likely have the opportunity to sell at a higher price.

Paying HOA fees. Typically, townhouses are managed by the homeowners’ association, which charges monthly fees, such as the HOA fee ranging from $50 to $300 per month. The HOA fee could deter possible homebuyers because some HOA fees in certain communities can be quite high, and also include transfer fees.

Buyers are not motivated with limited home improvement. Because every townhouse in a neighbourhood usually has the same design and floor plan, homebuyers are not motivated by their exterior and interior designs.

This can pose a problem when selling your townhouse since most buyers understand that home improvement or repairs will help generate a profit during the resale of the home. In other words, usually homebuyers avoid townhouses because they do not allow any changes.

Value of townhouses are influenced by other properties in the community. Since, as mentioned, all townhouses in your area will have the exact same design and floor plan, the value of your townhouse will be influenced by other properties in the community. When bad things happen within your area, you must ensure you are protected. For instance: the value of the entire area tends to drop if a bank forecloses a townhouse in your neighbourhood. That means you are likely to have issues with appraisals of your townhouse, since appraisals compare homes in the area to figure out the value.

Do townhouses have good resale value?

No, townhouses do not usually have a good resale value. You will be more likely to make more money if you rent out your townhouse. And selling your townhouse will be more difficult since they do not appreciate in value.

One of the major reasons townhouses do not have a good resale value is that any improvements you can make to the interior or exterior are limited. Put another way, homes that you can improve on will appreciate and therefore bring a good resale value.

The appreciation rate of most townhouses is low even though most houses generally appreciate over time. While stacked townhouses are gaining in popularity, first-time homebuyers still tend to prefer condos due to the purchasing price, location, utilities and amenities attached to them.

 

Copyright © 1996-2022 Key Media, Inc.

64-unit Cottages at Southgate housing complex opens in Lethbridge, Alberta

August 22nd, 2022

Alberta community receives substantial housing funding

Ephraim Vecina
other

New housing complex to begin accepting residents by next month

Federal and provincial officials announced a massive $15.8 million in combined funding during the grand opening of the 64-unit Cottages at Southgate housing complex in Lethbridge, Alberta.

The development, which will primarily cater to seniors in need of affordable and accessible homes, received $4.8 million from the government of Canada through the National Housing Co-Investment Fund and $3.4 million from the Albertan provincial government, coupled with $790,000 from the Lethbridge municipal government and a private donation of $500,000.

Another $6.26 million will be financed by Lethbridge & Region Community Housing Corporation.

“The Cottages at Southgate’s innovative and modern design will provide our seniors with accessible, affordable homes, outdoor gathering green spaces and is conveniently located near shopping centres, lakes, and walking paths,” said Robin James of Lethbridge and Region Community Housing Corporation.

Read more: Why Canadians are relocating during the post-pandemic era

“The Southgate complex in Lethbridge shows how the private sector, non-profit sector, and different orders of government can all work together to help more Albertans access the housing they need,” added Josephine Pon, Minister of Seniors and Housing. “Strategic, long-term partnerships, a key initiative under our Stronger Foundations affordable housing strategy, will help us meet Alberta’s diverse needs now and in the future.”

The housing complex is set to begin accepting residents by September 2022.

 

Copyright © 1996-2022 Key Media, Inc.

City of Vancouver and community groups worked together to address the neighbourhood’s challenges

August 21st, 2022

Eby says SROs not an acceptable answer

Katie Derosa
The Province

Says they must be phased out, but critic charges he did nothing about that as housing minister

 Hastings Tent City residents and allies prepare for a news conference earlier this week in front of the abandoned site of the city-owned Balmoral Hotel.

Activists decry the displacement of people living in tents in the Downtown Eastside, but David Eby says as premier, he would bring together all levels of government to address the problems in the neighbourhood.

The B.C. NDP leadership candidate told Postmedia that problems have been neglected for too long, and that he would phase out single-room occupancy buildings, as they are an inadequate solution for housing people.

“These are not acceptable government housing services, which is essentially what these residential hotels are,” Eby said. “So we need to phase them out.”

But Green party MLA Adam Olsen slammed the former housing minister for not spearheading such an approach when he had the power to do so.

“It’s fine for the former minister of housing to say, `This is what should happen.’ The question that I have is, `Why hasn’t this happened?’” said Olsen, MLA for Saanich North and the Islands. “He’s been the minister of housing up until just a few weeks ago.”

Last week, City of Vancouver staff began the process of removing tents and structures from the sidewalk on East Hastings Street.

Eby, who resigned as housing minister and attorney general to run for the leadership, suspects many of the people living in tents right now have single-room occupancy hotel rooms “that the government is paying for, that are unlivable.”

Many of the rooms, he said, have no windows or windows that don’t open, conditions that are unbearable in hot temperatures.

“We need to replace them with appropriate housing. We need to find a way to increase housing options in the neighbourhood for low-wage workers as well.”

Eby said when he worked in the Downtown Eastside during his time with Pivot Legal Society, the federal government, the province, City of Vancouver and community groups worked together to address the neighbourhood’s challenges through the Vancouver Agreement which began in 2000 but expired in 2010.

Since the collapse of that agreement, “there really hasn’t been a co-ordinated strategy or a plan about how we get out of the problems of the Downtown Eastside,” he said.

“I think essentially putting an invisible fence around the neighbourhood and saying `this is the best we can do’ and just hope that things work out, it’s a strategy that will no longer carry us forward.”

Eby said if he’s successful in his bid to replace Premier John Horgan, who is retiring, he’ll co-ordinate a long-term response to the issues in the Downtown Eastside with the help from the federal government, the city and concerned groups.

© 2022 The Province

Designs were announced for a 40-storey wooden building at 1745 West 8th in Vancouver

August 20th, 2022

Despite the hype, B.C. still has just two wooden highrises

Douglas Todd
The Vancouver Sun

Mass-timber towers, like UBC’s 18-storey Brock Commons, are called the best way to reduce the carbon emitted by concrete highrises. Why are there so few of them?

The dream of greener buildings is why an international buzz was created when designs were announced for a 40-storey wooden building, dubbed Canada Earth Tower, at 1745 West 8th in Vancouver. But it’s been stalled. Photo by Delta Group and Perkins and Will /PNG

During heated debate over the Broadway Plan, Vancouver city council responded with a concerted effort to pave the way for more mass-timber highrises.

But despite years of talk about such structures, only two have been built in B.C.

Stung by complaints that the hundreds of highrises intended for the Broadway corridor would be conventionally made of concrete, which produces massive greenhouse gas emissions, council scrambled in May to make its dramatic densification push fit with its 2020 climate plan, which promises to reduce carbon emissions in Vancouver by 40 per cent by 2030.

Sean Pander, manager of green buildings for the city, said the Broadway Plan stipulates that “new construction should explore innovative low-carbon building technologies, such as mass-timber construction” and “where possible, allow simplified building forms to facilitate the use of mass timber and other low-carbon building materials.”

Prodded by Broadway Plan opponents such as sustainability specialist Paul Morris, Vancouver council decided in May to change the building bylaw to allow mass timber outright up to 12 storeys, a hike from the previous cap of six storeys. Pander said council’s climate goals will ultimately “increase demand for mass timber buildings, like the 18-storey mass-timber student-housing building at UBC.”

Today, 12 storeys remains the city limit for a mass-timber structure, unless a builder can “demonstrate they meet the safety requirements of the building bylaw” through a so-called “alternative solution.”

Mass-timber towers, like UBC’s 18-storey Brock Commons Tallwood House, are often held up as the best way to reduce the immense amounts of carbon emitted by concrete-and-steel highrises in their construction and operation.

Brock Commons, a student residence, was the world’s highest contemporary wood highrise when it was completed in 2017 to many awards. Even though most of it, except for a common area and some exterior cladding, doesn’t look or feel particularly woodsy, Vancouver architect Michael Geller joined many in imagining it as a big part of the future of urban density.

But that was five years ago. Such towers remain rare, despite so-called “cross-laminated timber” technology being around for a couple of decades.

Brock Commons, at 53 metres (174 feet), is no longer the record holder for height. In a small town in forested Norway, a higher all-timber tower, Mjøstårnet, recently went up to 85.4 metres (280 feet). And a 87-metre (284-foot) luxury residential tower named Ascent MKE is nearing completion in Milwaukee, Wisconsin.

But the existence of three 18-storey-plus timber highrises in isolated locations is set against cities around the world packed with hundreds of thousands of concrete and steel highrises, which are generally defined as structures of 12 storeys and taller.

Metro Vancouver has more than 1,000 concrete highrises. And there are countless more coming, including in the city of Vancouver as its politicians try to increase population density in the core to ostensibly decrease commuting times and carbon fumes.

The big problem with concrete is the cement needed to make it, says Morris. When cement is created by roasting limestone and various compounds at high temperatures, it releases a tremendous amount of carbon. Chatham House, a British think-tank, says the annual production of four billion tonnes of cement causes eight per cent of world carbon emissions, much more than the airline industry’s two per cent.

 UBC’s Brock Commons Tallwood House, a student residence, was the world’s highest contemporary wood highrise when it was completed in 2017 to praise and many awards. Why have so few, including UBC, followed its lead? Photo by NICK PROCAYLO /PNG

Timber pillars reduce carbon dioxide emissions

Given the radically lower carbon advantages of wood, why are so few highrises made of this sustainable material?

Wood is a fifth the weight of concrete, which reduces the energy used for its transportation and cuts the need for massive foundations. Wooden buildings also require less insulation and less mechanical ventilation, says Morris.

Importantly, since the thick pillars in tall wooden buildings are made of trees, they retain carbon dioxide captured from the atmosphere as the trees grew.

The carbon-sequestering properties of wood confer a huge environmental benefit. The Journal of Sustainable Forestry estimated that substituting wood for current construction materials would annually save 14 to 31 per cent of global carbon dioxide emissions.

And many people simply find wood more esthetic. A New Yorker writer described Norway’s 18-storey wood building as “seductively calming” and its exposed five foot by two feet beams seemed “smooth, resonant, and much less cold than a metal pillar would have been.”

There are even peer-reviewed studies led by Cornell University’s Christina Kelz and others that have shown children who attend school in educational buildings with wooden walls and furniture have lower heart rates.

This kind of research encouraged the B.C. Forests Ministry in 2021 to put taxpayer money into a mass-timber demonstration program, which can be found at naturallywood.com.

The dream of greener buildings is also why an international buzz was created more than three years ago when a rezoning application was announced for a 40-storey wooden building, dubbed Canada Earth Tower, at 1745 West 8th in Vancouver. But it stalled for years as council reviewed the Broadway Plan. Now that the plan for much taller towers in the area is approved, says Vicki Su of Perkins & Will architectural firm, the Earth Tower project will be re-evaluated.

B.C’s forestry innovation website boasts “mass timber has been used in over 370 buildings in B.C. since 2007.”

But there remain only two completed mass-timber highrises in the province, says Sukh Johal, senior manager for Wood Works B.C. and the Canadian Wood Council. 

They are Brock Commons and Tallwood 1, a 12-storey residential-commercial building in the Victoria suburb of Langford, said Johal. A 10-storey wood building, called the Capstone, is under construction in Kelowna.

Several other wood tower plans have been made public in the past few years, Johal says, but it’s impossible to summarize whether they will get final approval, maintain financial feasibility or otherwise go ahead.

B.C.’s forestry innovation investment website says two of the major would-be projects are a 10-storey office building planned by BentallGreenOak in Vancouver’s False Creek Flats and Westbank’s 21-storey timber residential building, dubbed Prototype, for Vancouver’s Mount Pleasant.

Given such a short list, the question remains: Why are there so few mass-timber highrises in Canada and especially B.C. — given that two thirds of the province is covered in forest?

There are many reasons that visions of timber highrises have been so slow in coming to reality. Some are psychological. Some are technical. The mass-timber industry says both concerns can be overcome.

Another #fire in #Vancouver during the construction of a four storey #wood building. When wood advocates say wooden builds are safe, think twice. Buyer be aware.

  Overcoming old fears of fire

“Another fire in Vancouver during the construction of a wood building,” began a 2020 Tweet by Michael McSweeney, then-head of the Cement Association of Canada. “When wood advocates say wooden builds are safe, think twice. Buyer be aware,” McSweeney went on, attaching images of a blazing wooden apartment building.

It was one of many times the recently retired head of the Cement Association has raised the alarm about fires in wooden buildings.

Cautious fire chiefs have also for years raised worries about whether wood buildings are too vulnerable. But attitudes are shifting and technology is advancing. Researchers are finding, as are fire officials, that glue-laminated timber beams tend to merely char on the outside two or three centimetres, a bit like tree trunks in a forest fire. 

Still, fear of fire appears to be the key reason Canada’s National Building Code generally restricts mass timber buildings in the country to 12 storeys, says Peter Moonen, sustainability manager for the Canadian Wood Council. 

Most developers hold back on erecting mass-timber highrises because they’re waiting to see what happens when others do it, says Peter Moonen of the Canadian Wood Council. Photo by Submitted by subject /jpg

For Brock Commons, UBC officials obtained dispensation to go above 12 storeys by making a strong site-specific case, according to Moonen.

Regrettably, Moonen said, the developer of Brock Commons had to address fire chiefs’ fears by “encapsulating” virtually every one of its interior walls in three layers of Gyproc drywall, which is especially fire resistant.

“It added a lot of mess and a fair bit of cost,” said Moonen, although it did help the UBC project get erected on time and on a budget similar to a concrete and steel tower.

The good news, Moonen said, is that lumber officials, firefighters and insurance brokers are increasingly taking part in staged demonstration burns of timber structures.

Len Garis, former president of the Fire Chiefs Association of B.C., has been among those defending their safety.

That said, UBC is building the second phase of Brock Commons’ student residences out of conventional concrete. Asked why, a spokesperson said Tallwood House was a “unique demonstration project.”

 Even though UBC’s Brock Commons Tallwood House (background right) was built in 2017, the new residences of Brock Commons Phase 2 are being constructed with concrete.

Possible obstacles to mass-timber highrises

Lack of innovative spirit

Most Canadian builders are not famous for their sense of adventure, says Moonen.

Most developers hold back on erecting mass-timber highrises, he says, because they’re waiting to see what happens when others do it.

“It’s maybe why Canadians are satisfied with bronze medals,” Moonen says.

He also regrets that architecture, trade schools and others don’t show leadership in teaching students how to work with cross-laminated timber, including its special ability to be accurately machined. “It’s like offering a chef’s course and not teaching about how to cook with vegetables.”

Is timber ‘too’ light?

Although one huge advantage of wood is that it’s far lighter than concrete, Lloyd Alter, an architectural writer who teaches sustainable design at Toronto Metropolitan University, points out that engineers added concrete to the top floors of Norway’s wooden highrise because it was next to a windy lake. The wooden structure was in danger of swaying too much, causing residents to feel nauseated. 

There is little downside to plantation forests, which are managed forests in which the trees are planted for the maximization of wood fibre, says Lloyd Alter, architect, real estate developer. jpg

The lightness of mass timber is also one of the reasons wooden highrises are still made with concrete foundations, albeit of far less mass than for conventional construction.

How does the cost of mass-timber highrises compare?

“Cross-laminated timber is not cheap,” says high-profile Seattle architect Matthias Olt. “It is more expensive per unit than steel or concrete. The savings comes in reduced labour costs. The number of construction workers required on-site is cut in half.”

Wood buildings, he said, also last longer.

Why go over 12 storeys anyways?

Alter is among the architects and planners who believe it’s unwise to go higher than 12 storeys, whether a building is of concrete or wood.

Several researchers, notably Edinburgh Napier University’s Francesco Pomponi, have found buildings under 12 storeys produce less carbon emissions and create better communities.

Despite protests, forests can be grown in sustainable ways

More than 18,000 trees were required to build the Mjøstårnet in Norway, where the country’s pine and spruce trees tend to be smaller than the fir and hemlock of British Columbia.

While some environmentalists don’t want to see any old-growth trees cut down to produce buildings, many others, including Alter, say there is little downside to plantation forests, which are managed forests in which the trees are planted for the maximization of wood fibre.

As Moonen, who lives on the green slopes of the Sunshine Coast mountains, says: “We should be coming up with the brightest and best uses for what we grow in our own backyard.”

[email protected]

@douglastodd

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1.39 acres industrial land in Maple Ridge sells for $6.88 Million

August 19th, 2022

Maple Ridge 1.39-acre auto recycler business sells for $6.88 million

Western Investor Staff
Western Investor

Sale of industrial land and 7,900-square-foot building said to set record price for Metro Vancouver suburban city.

Royal LePage Westside Klein Group, Vancouver, for Western Investor

 

Property type: Industrial

Location: Kanaka Business Park, 13176 Lilley Drive, Maple Ridge, B.C.

Property size: 7,900 square feet

Land size: 60,584 square feet

Land size in acres: 1.39 acres

Business: Auto recycler

Zoning: M2 and M5 (specific to auto recyclers)

List price: $6.99 million

Sale price: $6.88 million

Date of sale: August 15, 2022

Brokerage: Royal LePage Westside Klein Group, Vancouver

Broker: Dmytro Chernysh

 

© 2022 Western Investor

Canada’s inflation rate hit 8.1% in June

August 18th, 2022

Where are interest rates headed for the rest of 2022?

Fergal McAlinden
other

The year to date has already seen its fair share of surprising news where variable and fixed rates are concerned

 It may seem hard to believe, but 2022 will soon be entering its closing stretch as the summer ends and fall comes into view.

For Canada’s housing and mortgage markets, there could be plenty of twists and turns ahead yet with three remaining interest rate announcements scheduled by the country’s central bank for the remainder of the year – on September 7, October 26, and December 7.

Bank of Canada rate hikes have been some of the most prominent stories of the year to date, the institution having raised its benchmark rate by a total of 2.25% in a series of announcements since March in response to swelling inflation.

While the country’s inflation rate hit a near-40-year-high in June of 8.1%, that figure fell to 7.6% last month, the first time consumer price index (CPI) inflation has fallen on a yearly basis for over two years.

That remains well above the Bank of Canada’s target 2% rate, a fact that means rate hikes are unlikely to slow or stop for the remainder of the year, according to one market observer.

Daniel Finkelberg (pictured top), mortgage agent with DLC Clear Trust Mortgages Inc., told Canadian Mortgage Professional that he expected further increases to variable rates, which are heavily influenced by central bank rates, before the end of the year.

“I do believe that variable rates will continue to increase,” he said. “I think that they’re increasing as a function of fiscal monetary policymakers setting guidance and understanding the reaction of inflation to that guidance, and that will continue to occur until they stabilize inflation to a certain degree.”

Read next: Canada’s inflation rate slows in July

A noteworthy trend in recent weeks has seen five-year fixed rates decline in line with falling bond yields, adding to an unpredictable housing market whose pace has cooled significantly over the last six months.

Still, Finkelberg said the market slowdown had been a somewhat uneven one, with specific areas registering more pronounced drops in sales and prices than others.

“The correction in the real estate market is an interesting one because you find tertiary markets that are dropping significantly more than certain pockets in the city,” he said. “And I think that’s natural that certain areas are not going to correct to the degree that people think they’re going to correct, because there’s still a ton of demand and not a lot of supply.”

That could see first-time homebuyers enter the market in increasing numbers in the coming months, he added, as investors bide their time before making a judgement call on whether to take the plunge.

“I believe that we’re going to see a flooding of first-time homebuyers into the market during these times,” he said, “whereas investors are taking a little bit of a step back trying to understand what is effectively ‘rock bottom’ before they enter the market.”

Those shifting conditions for mortgage holders mean that homeowners on a variable rate may be considering locking into a fixed one to stave off the uncertainty surrounding the future of variable rates.

Whether that’s a solid option depends on several factors, Finkelberg said, including the remaining term and length of the new one.

Read next: What will the next Bank of Canada hike mean for homeowners?

“I don’t know if it makes sense to take a five-year fixed during uncertain economic times because it’s a decision that you’re going to have to live with well beyond any economic correction,” he explained.

The potential Interest Rate Differential (IRD) penalty associated with fixed mortgages means that existing fixed-rate borrowers who may wish to avail of a variable rate when the Bank of Canada begins to slash rates in the coming years could be faced with a stiff charge for doing so.

“For you to take a five-year fixed with a potential IRD penalty today may not make as much sense as to take a two- or three-year fixed if you’re somebody that’s risk averse, and [wants] to really understand and let the market correct over the next two to three years,” Finkelberg said.

Some lenders offer the additional option of a variable-rate mortgage with a fixed payment, he added, allowing borrowers to mitigate their cash flow during challenging times – meaning that in many cases, the variable option is the more sensible one.

“A five-year variable allows you the opportunity to lock in,” he said, “as well as giving you some of that comfort over the next two to three years as the market is correcting.”

 

Copyright © 1996-2022 Key Media, Inc.

Canadian seeking detached homes have return to the market amid softer values in Q2

August 18th, 2022

‘Softer’ values for detached homes bringing buyers back into the market, RE/MAX study finds

Shantae Campbell
The Vancouver Sun

Second-quarter home sales increased across 40% of GTA neighbourhoods

 Homes in Toronto. Photo by James MacDonald/Bloomberg files

Canadians seeking detached homes have returned to the market amid “softer” values in the second quarter, according to a new release from Re/Max Canada.

Story continues below

The report compared market activity in the first and second quarter of 2022 in terms of unit sales and prices, analyzing 60 Toronto Regional Real Estate Board (TRREB) districts, 16 regions within the Real Estate Board of Greater Vancouver (REBGV) and six areas in the Fraser Valley Real Estate Board (FVREB). Re/Max found an increase in second-quarter home sales across 40 per cent of Greater Toronto Area neighbourhoods and 31 per cent of the Greater Vancouver region, compared to Q1.

“For those buyers that were active in (the second quarter), improved housing affordability due to easing prices and the threat of higher rates down the road clearly provided the impetus for many to leap into detached homeownership,” said Christopher Alexander, president of Re/Max Canada, in Thursday’s release.

According to the report, there have been some existing sellers in the City of Toronto who have used the opportunity to trade up to larger homes or more desirable neighbourhoods closer to the city. “The difference between the selling price of an existing property and the purchase price of a new one … has narrowed considerably,” the report said, a shift that can work in favour of the buyer given mortgage portability. Condominium owners have also benefited as values for their apartments and townhomes have remained relatively stable, while detached housing values have softened.

In the City of Toronto, the benchmark price of a detached home was $2,073,989 in February. In July, it fell to $1,515,763, according to TRREB. Meanwhile, the benchmark price for condominiums in the City of Toronto was $738,930 in July, down from the most recent peak of $840,444 in March but still up seven per cent over last year.

In Vancouver, the discounts are not as pronounced. For example, in April, detached homes saw a benchmark price of $2,139,200 compared to $2,000,600 in July.

“Buyers shouldn’t expect big bargains,” Elton Ash, executive vice-president at Re/Max Canada, said.

“Sales-to-active listings remain squarely in balanced territory overall and even tight in some areas. In Vancouver, for example, supply was lower this June than last in 50 per cent of markets, and sales are down accordingly. This trend will likely keep prices fairly stable moving forward,” Ash said.

Despite the softening in housing markets overall, active detached housing listings in June were running almost 19 per cent below the 10-year average in the GTA, approximately 12 per cent below the 10-year average in the GVA, and close to nine per cent below the 10-year average in the Fraser Valley. The decline in listings comes at a time when builders are pulling up stakes and shelving proposed developments due to softer demand. While the impact of those decisions will not be felt immediately, the decision to withdraw will significantly affect housing markets in these major centres down the road.

Canada is set to welcome over 430,000 immigrants annually until 2024, as stated in the federal government’s revised target released earlier this year. Fifty per cent of those newcomers will reside in the GTA.

“Inventory remains a puzzle that policy can’t solve in the foreseeable short or long term,” Alexander said. “It’s a real challenge, as the supply of detached homes remains low from a historical perspective and also in the context of population growth and future needs. This will remain a crucial factor impacting Toronto and Vancouver, which are now seen as world-class markets.”

 

© 2022 Vancouver Sun

Canada’s housing affordability continue to decline in Q2 2022

August 18th, 2022

Housing affordability deteriorates to new lows

Mika Pangilinan
other

Q2 marks “worst quarterly and annual deteriorations in 41 years”

Housing affordability across Canada continued to decline during the second quarter of the year, hitting the worst level of deterioration since the 1980s.

According to a recent report from the National Bank of Canada, mortgage payments now account for 63.9% of household incomes nationwide. This is a jump of 10.4 points from the previous quarter and 19.1 points from last year, marking the “worst quarterly and annual deteriorations in 41 years.” 

Regionally, all 10 of the markets included in the report saw affordability worsen for the sixth consecutive quarter. This deterioration was most evident in Vancouver, Victoria, and Toronto where mortgage payment as percentage of income (MPPI) exceeded 90% for all dwellings. The MPPI in Quebec, Winnipeg, and Calgary, meanwhile, were among the lowest at around 30% for all dwellings.

Q2’s record-low in affordability was largely the result of rising mortgage interest rates, with the five-year benchmark mortgage rate increasing 123 basis points. Steep home prices also contributed to the deterioration. Seasonally adjusted home prices jumped 5.1% on a quarterly basis, landing on a median price of $810,986. By comparison, income rose by only 0.8%.

 

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Canada softwood lumber and panel prices drop 11% from the previous week

August 18th, 2022

Lumber prices welcome “summer slowdown” with a dip

Mary Or
other

Interestingly, the price is nearly exactly where it was in 2020

Softwood lumber and panel prices dropped in Canada on the holiday-shortened week as customers kept well-stocked with wood, and producers saw shrinking order files. For the week ending August 5, the price of benchmark softwood lumber item Western Spruce-Pine-Fir (WSPF) 2×4 #2&Btr KD went down to USD610 mfbm – a $74, or 11%, dip from the previous week according to weekly forest products industry price guide Madison’s Lumber Reporter. This represents a decrease of $61, or 9%, from a month ago, and an increase by $71, or 13%, from the same week last year.

Western US sawmills were unable to extend their order files past the weeks of August 15 and 22.

According to producers of WSPF commodities in the US, August kicked off with weak demand that set the tone for the following weeks despite lower asking prices. While lumber traders in Eastern Canada saw a similar sag in sales and prices, the price dive was considered part of a normal, summer slowdown this time of year, when buyers are absent from the market to enjoy their vacation and those who participate stick only to their immediate needs.

Sawmill order files are around two weeks out, with the lion’s share of production available for mid-August shipment. Quebec producers and construction workers will finish their two-week summer shutdown hiatus on Monday next week.

Madison’s Lumber Reporter noted that the current lumber price is nearly identical to what it was two years ago but hesitated to conclude a similar trend line for the rest of the year considering the difference in circumstances between now and 2020. Now, factors such as increasing mortgage rates, dampening home sales and prices, and a steadily rising ratio of investors buying property will undoubtedly have a “powerful effect” on lumber prices, the industry price guide said.

 

 

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