Calgary downtown office space hits new vacancy milestone

Josh Aldrich
The Vancouver Sun

It is the first time in 30 years of reporting by CBRE that a major Canadian metropolitan centre has hit the troubling milestone, now sitting at 33.2 per cent

A cyclist crosses the Centre Street Bridge with downtown Calgary office towers as a backdrop on Wednesday, November 24, 2021. Photo by Gavin Young/Postmedia

One-third of downtown Calgary office space is vacant.

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It is the first time in 30 years of reporting by CBRE that a major Canadian metropolitan centre has hit the troubling milestone, now at 33.2 per cent in the core.

This is not a new issue for Calgary, but the continuation of a multi-year struggle driven by an oil and gas bust cycle and 22 months of pandemic.

“The concern is not necessarily the height of that vacancy at 33 to 34 per cent,” said Greg Kwong, executive vice-president and regional director for CBRE. “There are two concerns: Where do we go from here, and the second concern is how rapidly we went from a low single-digit vacancy rate 10 years ago to where we are today.”

The 2021 fourth-quarter report is not a drastic spike from third-quarter numbers released in October, when the vacancy rate stood at 32.9 per cent. Calgary, however, is the only major Canadian centre to see its office space vacancy actually increase, losing 169,584 square feet of rented space in the past quarter.

The rate is more than double the national average of 15.7 per cent.

Southern Ontario centres Waterloo Region (27.1 per cent) and London (26.1 per cent) were second and third on the list, while Edmonton had the fourth highest at 21.1 per cent. Edmonton is in a bit of a unique situation compared to Calgary, with four new office buildings coming on the market in the past couple of years, while government offices play a much bigger role in that city’s marketplace.

The problem is whether these rates will be sustained long term for Calgary. U.S. cities such as Denver and Pittsburgh managed to rebound from similar scenarios, while Detroit remains the cautionary tale of a city that could not. Calgary is a long way from that status, but Kwong said the effects are already being felt after more than 12 months above 30 per cent.

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“It’s the precipitous drop in property value that results in lower tax revenue, which results in lower income to run the city of Calgary,” said Kwong.

He said the second significant issue is the signal of long-term unemployment, which can result in the younger generation moving away from the city in search of jobs. This further spins off into lower participation in the arts, entertainment and recreation.

“The whole thing starts crumbling,” he said.

 

Greg Kwong, the Executive VP and regional manager of CBRE looks over downtown from his office building on Wednesday, January 12, 2022. Photo by Darren Makowichuk/Postmedia

However, there is hope on the horizon for the downtown. 

Neo Financial is moving into 110,000 square feet of downtown office space combined between the Hudson’s Bay building on 8th Avenue S.W. and the Edison office tower on 9th Avenue S.W.

Meanwhile, the Paramount Building has been taken off the market after being converted. There have also been a few other recent announcements of smaller tech firms and startups coming to Calgary.

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This has helped buffer the numbers from being worse, but the downtown is still a long way from righting the ship. Kwong said tech still only makes up about five to six per cent of downtown office space, while the real catalyst for change will be the energy sector.

The recovery of oil and gas will continue to be important, said Kwong, especially as it pertains to potential mergers and investment in staff. But where the game can change is when it comes to the development of the clean energy sector and changing the discussion around it for Albertans.

“The narrative when you say environment to the average Albertan, it means layoffs,” said Kwong. “It shouldn’t be that narrative, it should be we’re going to try to support companies that focus on the environment and hire people in Calgary and Alberta. That should be the narrative, not what we’re hearing from city hall right now.”

[email protected]

Twitter: @JoshAldrich03

© 2022 Vancouver Sun

Sales surge 240 percent in Canada’s hottest market

Ari Altstedter
other

Transactions include the highest-price ever paid in the area

Even the ultra-wealthy are finding they’re not immune to Canada’s housing shortage, and nowhere is that truer than in the country’s most expensive major market, Vancouver.

Luxury real estate in the city broke local records last year, with sales of mansions priced over CA$10 million growing 240%, faster than anywhere else in Canada, according to a report Wednesday by Sotheby’s International. Toronto wasn’t far behind with 238% growth.

Those transactions included the highest price ever paid for a single-family Vancouver home. Sotheby’s wouldn’t say how much the property, known as Belmont Estate, went for, but CTV News cited a price of CA$42 million.

High-end real estate has been buoyed by the same pandemic-led forces that have made Canada’s overall housing market one of the hottest in the world: low interest rates and high interest in living spaces. Demand for luxury housing has been juiced even further by the surging stock market, making many rich Canadians richer.

But Canada hasn’t built enough houses, big or small, in recent years to keep up with this surging demand or with population growth. The number of properties listed for sale nationally has plunged to a record low. In Vancouver, about 5,000 homes were for sale at the end of last year, the fewest in data going back 30 years.

In the luxury segment, houses worth CA$10 million or more are staying on the market for a shorter time, weeks rather than months, said Kevin O’Toole, managing broker at Sotheby’s in Vancouver.

One factor holding down inventories is that luxury home buyers, seizing on record-low mortgage rates, are holding onto their old properties longer. Rather than put their homes up for sale in tandem with their search for a new one, these buyers are holding onto their old ones, too, and slowing down the turnover process, O’Toole said.

“A luxury homeowner does not want to leave their luxury home because they don’t know where else they would go,” O’Toole said. “They don’t want to sell their place and not have a home to go to.”

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Victoria councillor floats idea of tying rent increases to property tax hikes

Roxanne Egan-Elliott
The Vancouver Sun

David Hutniak, CEO of LandlordBC, said the proposal sounds “a little complicated,” but he’d like to see the city pursue the idea, because property taxes are one of the main factors driving costs for landlords.

Photo by Getty Images /PNG

VICTORIA — City Coun. Geoff Young is proposing a change to rules governing rent increases that would see them go up directly as a result of rising municipal property taxes.

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In a motion going to councillors on Thursday, Young recommends that council advocate for a change to provincial rules governing annual rent increases that would allow landlords to tie a portion of a tenant’s rent to property taxes, increasing that portion directly as municipal taxes change.

 

 

 

Victoria city councillor Geoff Young. Photo by City of Victoria /PNG

Young said he’s motivated by a concern about the level of spending being proposed by council as the city moves through the 2022 budget process. Property owners tend to show more of an interest in municipal elections and budget decisions, and he sees the proposal as a way to encourage renters to participate in municipal decisions and elections, in turn increasing the overall number of residents engaging with the city’s budget process, he said.

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“People do want to participate when they see it impacts them, and I think it’s better if those impacts are clear and visible to people,” Young said.

When Victoria held an online budget engagement survey for 2022, 41 per cent of respondents identified as renters. That was down from 57 per cent the previous year but up from 35 per cent two years earlier.

Young is suggesting that the province determine an average percentage of rent that represents the costs of a landlord’s property taxes for the unit and that portion would increase according to municipal property tax changes, while the rest would remain governed by the province’s annual allowable rent increase. The maximum increase in 2022 is capped at 1.5 per cent, following a rent freeze in 2021 as a result of COVID-19, but has been as high as four per cent in 2018.

The proposal likely wouldn’t affect rents by a significant amount, but would show renters the direct impact of property tax increases, Young said.

David Hutniak, CEO of Landlord B.C., said the proposal sounds “a little complicated” but he would like to see the city pursue the idea, because property taxes are one of the main factors driving costs for landlords.

“If there was a mechanism for rents to more accurately reflect our costs specific to the property taxes, in terms of rent increases, etc., I think that would be a conversation worth having,” he said.

Tenant and affordable housing advocates, however, see problems with the proposal.

“It’s about as misunderstood a policy as you can possibly put in terms of affordability in housing,” said Douglas King, executive director of Together Against Poverty Society.

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Landlords have options to apply for loans and grants to pay for property tax increases, and they sit on the value of their asset, while tenants rarely have options if they can’t afford rent, King said: “I just don’t understand how you could possibly push forward a motion that would increase rent at a time like this. It makes no sense.”

Jeremy Schmidt, a contributor to Homes for Living, a group of homeowners and renters dedicated to making Victoria housing more affordable, said the proposal seems like “an absurd way” to increase civic engagement among renters.

Renters are already indirectly paying property taxes through their rents, he said, and there are better ways to engage renters in municipal decisions, such as a more scientific budget engagement survey, rather than a self-selecting survey.

“From a housing policy perspective, it doesn’t really solve a problem. It exacerbates an existing problem,” Schmidt said.

 

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© 2022 Vancouver Sun

Three-tower complex pitched for downtown Kelowna

Wayne Moore
Western Investor

Mission Group and the University of British Columbia Okanagan present proposals for a massive mixed-use complex that still requires city approvals

Mission Group and the University of British Columbia Okanagan present proposals for a massive mixed-use complex that still requires city approvals

Kelowna’s Mission Group has unveiled plans for its portion of a large three-tower downtown development on Doyle Avenue in the downtown.

The development, in partnership with University of British Columbia Okanagan (UBCO) includes a 34-storey university campus and student housing building, along with the two new towers to be developed by Mission Group.

The towers, to the north of the university campus building, are proposed to include a 16-story commercial building and 30-storey residential tower.

They would be constructed above a shared underground and above grade parkade consisting of 461 stalls.

Along with residential and commercial space, the buildings would also be comprised of street level office and retail space.

The project is conceived as a “truly mixed-use live, work, play and shop development, combined with the rare contribution of learning and studying with the UBC component,” according to Mission Group.

In order to proceed, council will be required to approve a number of variances including one for height.

The property is presently zoned for heights of 12 storeys.

In late December 2021, UBCO submitted an application to the city to rezone the Doyle Avenue property from the current C7 zone to a Comprehensive Development Zone. They are also seeking a development permit for the mixed-use tower.

Overall design of the 34 storey tower will include approximately 390,000 square feet of space, featuring a medical clinic, commercial retail units, eight storeys for academic use, two storeys of office space and 24 storeys of student housing with 324 units.

The application is expected to reach city council in the coming months. UBCO has stated previously it hopes to begin construction by mid-2022.

© 2022 Western Investor

U-Haul: Canadians looked to Alberta for housing in 2021

Ryan Garner
Livabl

Attracting newcomers with affordable housing and employment initiatives, Alberta saw increased inter-provincial migration last year, while Calgary strengthened its status as one of Western Canada’s top move-in destinations.

According to the annual U-Haul Growth Index, Alberta led the country in one-way customers during 2021, followed by British Columbia and Ontario.

The province saw a 33 per cent year-over-year increase in one-way U-Haul truck arrivals last year, while departures rose just 29 per cent. More than 50.8 per cent of all U-Haul traffic in Alberta was inflow.

“There are initiatives in Alberta that are creating more job opportunities and attracting residents,” said Naga Chennamsetty, U-Haul area district vice-president of Western Canada, in the report. “In the last year, we have seen lot of movement into Alberta. More communities are developing in and around major cities.”

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Calgary was the province’s top destination for do-it-yourself movers. After failing to place among the top 25 Canadian cities in U-Haul’s move-in rankings in 2020, Calgary vaulted to fifth last year.

Ontario markets — North Bay, Belleville and Greater Sudbury — held the top three spots, reflecting a shift away from major urban centres to more affordable outlying areas. Quebec City (fourth) and Kelowna-West Kelowna (sixth) were the top growth cities in Quebec and British Columbia.

Kingston claimed seventh place, while Red Deer-Lacombe, Owen Sound-Port Elgin and North Vancouver rounded out the top 10. Medicine Hat-Redcliff (15) and Airdrie (19) were the only other Alberta markets to rank in the top 25.

The migration data coincides with a record-setting year for Calgary home sales. According to the Calgary Real Estate Board (CREB), transactions through its Multiple Listing Service totalled 27,585 in 2021, an increase of 71.5 per cent from the previous year.

Besting the previous record (27,193) set in 2006, annual sales exceeded 20,000 for the first time since 2014. The numbers also represent a significant increase from pre-pandemic activity levels. Calgary posted a total of 16,344 transactions during 2019.

Housing affordability could be one reason for the influx of new residents. The CREB reports Calgary’s benchmark price was $451,467 by the end of 2021.

In its Canadian Housing Market Outlook for 2022, RE/MAX Canada noted that Calgary shifted from balanced conditions to a seller’s market in 2021, and expects the city’s MLS sales to increase four per cent year-over-year, with prices rising 2.5 per cent.

“This is attributed to heightened demand prompted by the inter-provincial migration trend that took place throughout 2021, which saw many homebuyers from Ontario and British Columbia driving demand high, while supply remained low,” the report said.

© 2020 BuzzBuzzHome Corp.

Vaughn Palmer: B.C. NDP signals continued support for homeowner’s grant

Vaughn Palmer
The Vancouver Sun

Opinion: House-value threshold for homeowners’ grant matches increase in B.C. home values as NDP stick by promise to not tinker with 65-year-old tax break

B.C. Finance Minister Selina Robinson announced last week that homeowner’s grant would apply to principal residences with assessed values of up to $1.975 million. Photo by Selina Robinson Minister of Fina /PNG

VICTORIA — Finance Minister Selina Robinson started the year by increasing the eligibility threshold for B.C.’s homeowner grant by 22 per cent, ensuring the decades-old break on property taxes will continue to apply to nine out of 10 homeowners whether they need it or not.

Last week’s announcement means the basic grant of $570 will apply to principal residences with assessed values of up to $1.975 million, up from last year’s threshold of $1.625 million.

The increase, reflecting this year’s average 22 per cent increase in property assessments, was necessary to keep pace with the NDP government commitment that 92 per cent of all residential properties qualify for the grant.

The $350,000 increase in the threshold was the second largest in dollar terms for the homeowner grant (HOG), exceeded only by the $400,000 boost in the last year under the B.C. Liberals.

The latest surge, derived from the year-over-year increase in assessed values for residential properties as of last July 1, showed that the New Democrats have made limited progress on their election promises to improve housing affordability in B.C.

Still, there is no reason to expect the NDP to respond favourably to calls for the government to reform or abolish the HOG — or “hog” as critics prefer — and use the savings to fund other, more needy causes on the housing front.

The near universal aspect of the grant has drawn increased criticism in recent years, including from two former NDP ministers of finance.

Four years ago, former NDP finance minister Paul Ramsey was part of a government-appointed tax panel that branded the grant as “inconsistent with principles of progressivity, administrative efficiency and fairness.”

The panel recommended it be abolished in favour of tax credits for homeowners and renters, means tested on income and phased out completely for the highest earners.

The New Democrats declined to incorporate the recommendation in their 30-point plan to improve housing affordability.

Then last summer a federal-provincial commission chaired by another former NDP finance minister, Joy MacPhail, condemned the grant and recommended the savings be used to fund social housing.

“The report is not intended to actively discourage home ownership,” the panel insisted. “Rather the focus of the recommendations is to achieve more equitable treatment of renters relative to homeowners.”

But within an hour of the release of the MacPhail report, Robinson rejected the call.

“I can absolutely assure the member that we are not interested in making any changes in the homeowner grant,” she assured Opposition MLA Mike Bernier in answer to a question posed in the legislature.

 

She could hardly do otherwise, having earlier in the year assured the legislature repeatedly that the New Democrats had no designs on the grant.

It happened during debate on legislation that saw the Finance Ministry take control of the grant application process from municipalities.

The shift was undertaken to reduce costs to local government and add “rigour to grant administration to help fight tax evasion, reduce fraud and ensure people are paying the right amount of tax,” according to Robinson.

The province also required grant applicants to provide, for the first time, their social insurance numbers — SINs in taxpayer parlance.

The Opposition, ever suspicious, wondered if the move were a prelude to the government clawing back the grant in whole or in part or using the tax numbers for means testing.

Far from it, insisted Robinson.

“The social insurance number is a common identifier for many tax programs,” explained Robinson. “This is not an unusual component of making sure of eligibility for programs and using it to identify which citizens or permanent residents are making applications.”

The grant itself “is part of affordability,” so far as the New Democrats are concerned.

“I can confirm that there is no intent to change the homeowner grant,” said Robinson, repeating the line several times.

She went on to pay tribute to the historic nature of the grant, a mainstay of tax relief for homeowners since it was created by premier W.A.C. Bennett in 1957.

“What’s before us is a grant that has existed for decades,” Robinson acknowledged. “Again, this legislation before us is not about changing the grant. It’s just about where it’s going to be administered.”

The New Democrats have other grounds for hesitating, recognizing that assessed values do not necessarily equate to either wealth or affordability for some homeowners

Some of those $2 million grant-eligible principal residences are owned by younger people struggling to pay huge mortgages and seniors on fixed incomes protecting their equity so they can pass it on to their children and grandchildren.

While increasing the eligibility threshold, Robinson has left the grant structure unchanged.

The basic grant is $570 for residents of the Metro Vancouver, Fraser Valley and Capital Region Districts.

The entitlement increases to $770 in other parts of the province. Seniors and persons with disabilities are eligible for a $275 top up to the grant, wherever they live.

Means testing, regional thresholds and other suggested reforms would mean tinkering with a near-universal tax break that has been baked into the expectations of homeowners for 65 years and counting.

No wonder the finance minister, speaking for the NDP government, declared the grant off limits with a kind-of “read my lips” declaration on the floor of the legislature.

Not likely could Robinson repudiate those words without undermining her credibility on other finance, budget and taxation matters.

[email protected]

© 2022 Vancouver Sun

This study shows where everyone moved to when they left the big cities last year

Shari Kulha
other

While B.C. ranked second for in-migration, far fewer moved to its more expensive cities

 DIY movers inadvertently help track population movements when they rent one-way U-Haul trucks. Photo by U-Haul

When the pandemic begin in 2020, larger cities across Canada saw an exodus of people to small towns and rural areas. One company keeping track of such movement is U-Haul, the truck rental company for DIY movers.

Its annual Growth Index study examines moving patterns, calculating the net gain of one-way U-Haul trucks arriving in a city or province, versus departing from that city or province, in a calendar year. U.S. movements into Canada were calculated as well, but because of pandemic restrictions, the numbers were likely negligible.

“While U-Haul migration trends do not correlate directly to population or economic growth,” the company says, “the U-Haul Growth Index is an effective gauge of how well cities are both attracting and maintaining residents.”

People moving last year eschewed British Columbia for Alberta. B.C. fell from the No. 1 spot in 2020 to No. 2 last year, replaced at the top by Alberta.

“Alberta is one of best places to make a home,” says U-Haul’s district vice-president of Western Canada Naga Chennamsetty. “In the last year, we have seen a lot of movement into Alberta.”

Chennamsetty said in a release that “there are initiatives in Alberta that are creating more job opportunities and attracting residents.”

Of the top 25 Growth Cities nationally, three are in Alberta. Red Deer-Lacombe came in eighth, Medicine Hat-Redcliff 15th and Airdrie 24th. All three are in roughly the southern fourth of the province. Lethbridge also grew from inflow but missed the Top 25 cutoff. Airdrie saw slightly fewer people move in, dropping to 24th place from 19th.

Indicative of their recent growth spurt, neither Red Deer nor Medicine Hat were on U-Haul’s growth list for 2020 year at all.

While Calgary’s top rank in inflow helped land Alberta at the top of the provincial listings for net growth, Ontario saw a wider distribution of people. For a second year running, the  top urban growth in Canada occurred in North Bay, followed by Belleville and Greater Sudbury. Richmond Hill, at Toronto’s northern border, also saw high growth but just missed the study’s Top 25 cutoff.

The number of DIY movers settling in North Bay rose 40 per cent year-over-year, while departures rose just 27 per cent. These one-way customers accounted for 59.2 per cent of all U-Haul traffic in the city in 2021, meaning that more people were moving into the town than were simply moving within it.

U-Haul’s Eastern Canada area vice-president Jake Spelic says in the release that, while Ontarians moved in vast numbers to the Maritimes after the pandemic hit, “as time has passed and things shift closer to normal, we are starting to see that trend reverse. Ontario is still the economic centre of Canada and offers a high quality of living, thousands of job opportunities and attractive salaries.”

Toronto did not make the Top Growth Cities list for DIY movers, but many of the Ontario cities that did are in the populous southern Ontario region. Six urban areas in the Golden Horseshoe hit the chart for growth, from Chatham at No. 13 to St. Catharines at No. 25.

In B.C., Kelowna hit sixth on the Growth Cities list, Kamloops 11th and Penticton 21st. None of the three was on the previous year’s list. Apparently reflective of the more expensive real estate, people bypassed the cities of North Vancouver, which slipped to 10th spot from second in 2020; Abbotsford to 22nd from 11th; while Vancouver plummeted to 23rd from seventh.

Chilliwack, just east of Abbotsford, just missed the Top 25 list.

Quebec City posted a dramatic climb to fourth place from 16th on the list. It was the only city in Quebec to make the Growth Cities ranking, though Gatineau and Sherbrooke came close to making the list.

 

© 2022 National Post

Lumber prices latest Canada soars There has been a big impact from flooding

Jen Skerritt
other

There has been a big impact from flooding

Lumber prices are soaring to levels not seen in seven months as the lingering effects of flooding in Western Canada disrupt supplies and shipments.

Lumber futures jumped 3.8% to the exchange limit of $1,219 per 1,000 board feet in Chicago Thursday, touching the highest price since June 7. Prices have been climbing since rainstorms hit British Columbia in November, damaging highways and rail lines and forcing sawmills to temporarily shutter operations. Persistent supply logjams and strong demand are fuelling the rally.

The surge adds to swelling homebuilding costs when consumers are already paying more for goods ranging from food to fuel. Soaring lumber prices in the past four months have boosted the price of an average new single-family home by more than $18,600, according to the National Association of Home Builders.

Lumber is the most common building material for North American homes and as much as 15% of the wood used in the US comes from B.C., according to ERA Forest Products Research.

“If we see lumber prices above $1,000 for a prolonged period then it could negatively impact repair and renovation demand,” ERA analyst John Cooney said in an email. “When a deck project is now three times the price quoted last year, buyers will typically defer.”

Wood prices have been volatile since the pandemic began. They touched record highs in May after Covid-19 lockdowns spurred a building boom, then collapsed as sawmills ramped up production and high prices stifled demand. Even with the swings, lumber has been among the top performing commodities in the past year.

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Wallet-pinching wood: Surging lumber costs pushing new home prices higher

Ryan Garner
Livabl

Supply issues resulting from British Columbia’s record rainfall and increased demand are pushing lumber prices higher, reducing housing affordability heading into the new year.

According to Random Lengths, lumber prices have nearly tripled since August, surging to more than $1,000USD per thousand board feet. As a result, the National Association of Home Builders (NAHB) estimates the average price of a new single-family home has increased by more than $18,600USD.

While Canadian numbers weren’t available, similar price increases in Canadian dollars would add more than $23,500 to the price of a new home, disrupting the housing market and adding to the ongoing affordability crunch.

However, according to Liz Kovach, president of the Western Retail Lumber Association, Canadian consumers shouldn’t be as worried about rising lumber costs as those south of the border.

“If you’re listening to what’s happening in the U.S., they are paying tariffs on lumber prices,” Kovach said. “They’re going to see higher prices simply because they’ve implemented tariffs on Canadian lumber so that cost is getting passed on to the consumer.”

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Lumber’s rollercoaster price volatility dates back to the start of the COVID-19 pandemic. Anticipating reduced demand, sawmills pulled back on production in spring 2020, then had trouble meeting demand from an unexpectedly hot housing market and renovation projects ramping up.

Prices surged to more than $1,500USD per thousand board feet in May 2021 before a combination of increased lumber production and reduced renovation demand brought prices back to earth, bottoming out at $389USD in August.

However, prices gradually crept up through the fall, climbing past $600USD in November before surging last month. Lumber saw a weekly record price gain of $129USD in late December, with buyers trying to lock in prices in advance of U.S. tariffs on Canadian softwood doubling.

The increased demand resulted from the U.S. Department of Commerce imposing average duties of 17.9 per cent on softwood lumber imported from Canada, twice the previous rate of 8.99 per cent.

Additional factors behind the latest price push include hot and dry conditions stoking a destructive summer wildfire season along the West Coast, as well as supply chain disruptions stemming from B.C.’s record rainfall in November.

Several B.C. roadways and rail lines were damaged by flooding and landslides, contributing to a supply chain bottleneck at the Port of Vancouver. Lumber shipments were delayed, causing a supply crunch and pushing prices up as home builder demand remained high.

It remains to be seen whether lumber prices will continue their upward trajectory into the spring, as construction projects ramp up and demand increases.

© 2020 BuzzBuzzHome Corp.

Economists forecast rising home sales, prices in 2022 CIBC is the out

WI Staff
Western Investor

CIBC is the outlier in forecasting a national 15 per cent drop in sales compared to 2021

Despite headwinds, most analysts forecast robust housing market this year. | File photo

CIBC is the outlier in forecasting a national 15 per cent drop in sales compared to 2021

Most of Canada’s biggest mortgage lenders and its largest real estate groups are forecasting a robust housing market this year, with some seeing double-digit sale increases and sharp price hikes, despite rising lending rates and a shortage of homes for sale.

CIBC, however, believes overall residential sales will decline this year, though condo prices could rise.

And the BC Real Estate Association sees the provincial sales pace slowing, with a 15 per cent decline in home transactions in 2022, compared to the record-setting pace of 2021.

The outlook from most analysts parallels that of the Canadian Real Estate Association, which expects 2022 home sales to increase 8.6 per cent compared to last year, with prices rising 7.6 per cent.

Royal LePage, citing rising immigration, predicts that average house prices will increase 10.5 per cent in 2022. Re/Max Canada sees a 9.2 per cent price increase, year-over-year.

All the forecasts, however, are shadowed by the fact that most analysts expect the Bank of Canada overnight lending rate to increase from its current setting of 0.25 per cent to 1.25 cent by the end of 2022, in a series of hikes.

The Royal Bank of Canada predicts 2022 home sales to increase 19.8 per cent from a year earlier, with the average home price increasing 3.3 per cent “We expect extremely tight demand-supply conditions will keep prices under intense upward pressure in the near term though we see such pressure easing significantly by the second half of 2022 as markets achieve a better balance.”

The Toronto Dominion Bank is forecasting a 7 per cent increase in home prices this year, noting, “both new and resale markets remain drum-tight, suggesting another strong year for price growth is in the cards for 2022.”

The Canadian Imperial Bank of Commerce (CIBC) is the outlier, cautioning that home sales could drop in 2022 and condos may be the only sector to see price growth.

“Overall, we expect sales to fall by 15 per cent in 2022, relative to the elevated level seen in 2021—an environment that is consistent with a notable deceleration in home price inflation next year,” wrote economist Benjamin Tal. “This environment is also likely to impact the relative value of condos vs. a single-detached unit. Logic suggests that higher rates will channel more activity into the more affordable condo market, resulting in relative price outperformance in that market.”

© 2022 Western Investor