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North Vancouver Real Estate Market Trends 2026: Best Areas To Buy A Home

Fri, 19 Jun 2026 11:42:22 GMT

Explore North Vancouver real estate market trends for 2026, top neighbourhoods to buy, and expert insights on home values, demand, and investment with Mehdi Miar.

Best Realtor Vancouver: How To Choose The Right Real Estate Agent In 2026

Thu, 18 Jun 2026 11:56:56 GMT

Looking for the Best Realtor Vancouver in 2026? Discover how to choose the right agent with expert insights on zoning, strata, and home buying from Mehdi Miar.

Luxury Homes North Vancouver: Best Neighborhoods For Luxury Living

Wed, 17 Jun 2026 11:59:11 GMT

Luxury Homes North Vancouver buyers can explore top luxury neighbourhoods, market trends, and lifestyle benefits with expert guidance from Mehdi Miar.

West Vancouver Luxury Homes: Why Buyers Prefer West Van In 2026

Tue, 16 Jun 2026 12:04:09 GMT

Explore West Vancouver luxury homes in 2026. Discover the best neighbourhoods, luxury market trends, and buying insights with expert guidance from Mehdi Miar.

Persian Realtor Vancouver: Why Farsi-Speaking Buyers Prefer Local Experts

Mon, 15 Jun 2026 12:06:31 GMT

Looking for a Persian Realtor Vancouver buyers trust? Get expert real estate guidance, local market insights, and Farsi support from Mehdi Miar.

Lower Lonsdale Real Estate Guide: Is LoLo The Best Place To Live?

Sun, 14 Jun 2026 12:08:28 GMT

Explore Lower Lonsdale real estate in 2026. Discover condos, transit access, lifestyle benefits, and expert buying insights with Mehdi Miar.

Burnaby Real Estate Market Trends 2026: Best Areas To Buy Property

Sat, 13 Jun 2026 12:10:25 GMT

Explore Burnaby real estate market trends for 2026. Discover the best areas to buy, property insights, and expert guidance from Mehdi Miar.

Burnaby Condos for Sale: Best Affordable Areas For First-Time Buyers

Fri, 12 Jun 2026 12:12:54 GMT

Explore Burnaby condos for sale in top affordable areas. Find first-time buyer opportunities, transit access, and expert guidance from Mehdi Miar.

Coquitlam Real Estate Market Trends 2026: Where Smart Buyers Are Investing

Thu, 11 Jun 2026 12:14:59 GMT

Discover where smart buyers are investing in Coquitlam real estate. Get market trends, neighbourhood insights, and expert advice from Mehdi Miar.

Coquitlam vs Burnaby Real Estate: Which Area Is Better To Buy In 2026?

Wed, 10 Jun 2026 12:18:21 GMT

Compare Coquitlam vs Burnaby real estate in 2026. Explore top neighbourhoods, market trends, and expert buying insights from Mehdi Miar.

Vancouver Real Estate Market Update: What to Expect in Early 2026

Fri, 30 Jan 2026 19:03:42 GMT

Is the Market Shifting? A Look at Inventory and Interest Rates

As we enter the first quarter of 2026, the Metro Vancouver real estate market is showing signs of new opportunity. After a period of fluctuation, we are seeing a stabilization that benefits both strategic buyers and sellers who are priced correctly.

Many clients ask me: "Is now the right time to move?" The answer depends on your goals, but the data points to a unique window for upsizers and investors.

For Buyers: More Choice, Less Pressure
For the first time in years, buyers are enjoying a more balanced playing field. Inventory levels in North Vancouver, Burnaby, and Coquitlam have normalized, meaning you are less likely to face the intense bidding wars of the past.
Time to Decide: Buyers now have time to perform due diligence, including proper inspections and financing reviews.
Presale Opportunities: With developers eager to move inventory, we are seeing attractive incentives in the Brentwood and Metrotown presale markets that were not available 12 months ago.

For Sellers: Strategy Matters More Than Ever

In a balanced market, "listing and waiting" is not a strategy. Marketing is the differentiator. Properties that are staged, professionally photographed, and priced in alignment with current comparables are still selling quickly.

Sellers looking to upgrade are in an excellent position. While you may sell for slightly less than the peak, the gap to move up to a detached home or larger townhome has narrowed, making the "move-up" more affordable.

The Forecast for 2026

We anticipate a steady spring market as interest rate policies continue to stabilize. If you are waiting for the "perfect" bottom, you often miss the best selection. The smartest move is to buy when you are financially ready and holding for the long term.

Questions about your home's value in this market? Contact Mehdi Miar today for a data-driven home evaluation.

Get My Free Home Evaluation

Bank of Canada cuts key interest rate to 4.75%

Tue, 04 Jun 2024 02:07:00 GMT

The Bank of Canada has lowered its key interest rate to 4.75 per cent, marking the bank's first rate cut since March 2020.

Bank governor Tiff Macklem said in opening remarks that the bank's monetary policy no longer needs to be as restrictive.

"We've come a long way in the fight against inflation. And our confidence that inflation will continue to move closer to the two per cent target has increased over recent months," Macklem said.

Economists were largely expecting the move. The inflation rate has moved closer to the bank's two per cent goal in recent months, coming in at 2.7 per cent in April, with the bank's preferred core measures of inflation also easing throughout the spring.

"It's a small cut, but I think a grand gesture," said Royce Mendes, managing director and head of macro strategy at Desjardins. He noted that the Bank of Canada is the first of the G7 central banks to begin cutting rates.

With many homeowners set to renew their mortgages in the next few months, "if the bank had left interest rates high for too long, we could have tipped the economy into an unnecessary recession," he noted.

"They want to get rates down, but they'll do it in a gradual way, and it'll probably be a less pronounced rate-cutting cycle than we've seen in prior decades, because we're not in the midst of a recession. What we're trying to do right now is fend one off."

CIBC economist Andrew Grantham wrote in a note to clients that "with core inflation decelerating and growth remaining tepid there wasn't a good excuse to not begin the process of moving rates lower today."

He expects the Bank of Canada to lower interest rates by another 25 basis points at its next meeting, on July 24, with another two cuts after that before the end of the year.

Tu Nguyen, an economist with RSM Canada, noted that a single rate cut won't revive the economy overnight.

But she said it "signals to consumers and businesses the beginning of a gradual and orderly rate cut cycle that will unfold over the next year and a half. Recovery can begin now and hit full force in 2025."

Source

B.C. Budget 2024: New house-flipping tax, help for first-time homebuyers

Thu, 22 Feb 2024 03:02:00 GMT

First-time homebuyers will get a tax break, while speculators are being targeted in new housing initiatives unveiled in B.C.’s 2024 budget.

The tax programs come along with new money earmarked for the province’s BC Builds program intended to spur the construction of new rental housing.

The initiatives come with the NDP government claiming 78,000 homes have been “delivered or (are) underway” towards its 2017 election pledge to build 114,000 homes.

House-flipping tax unveiled

Starting in 2025, the province will implement a new “home-flipping tax” to target the profit made from selling a residential property within two years.

Sellers will see a 20 per cent tax on profit if they sell the property within the first year of purchase, with the rate declining to zero over the course of the second year. It will also apply to assignment contracts.

Exemptions will apply “for certain life circumstances” including separation, death, divorce and disability. The province has also pledged exemptions for sellers who “add to the housing supply or engage in construction and real estate development.”

Exemptions, and how they will be assessed and enforced, however, have not been fully fleshed out, according to the Ministry of Finance.

The tax is expected to bring in $43 million in 2025 during the first year it is fully in force.

A house flipping tax was one of B.C. Premier David Eby’s promises during his 2022 leadership campaign.

Property transfer tax exemptions

While the province is aiming a new tax at would-be speculators, it’s also unveiling a tax break for first-time homebuyers and rental housing developers.

As of April 1, 2024, the threshold for the exemption to the property transfer tax for first-time homebuyers is being lifted from properties costing half a million dollars to $835,000. Properties with a fair market value of under $500,000 will be completely tax-exempt.

The budget estimates the number of buyers eligible for exemptions will double, to about 14,500 people per year, with maximum savings of $8,000 on a purchase.

Newly built homes valued under $1.1 million will also see a property transfer tax exemption as of April 1, raising the threshold for the tax break from $750,000.

The province is also rolling out a basic property transfer tax exemption for purchases of new, qualifying purpose built rental buildings, aimed at encouraging new rental construction. The exemption will apply between 2025 and 2030.

The exemption covers non-stratified buildings held as rentals for at least 10 years, and including at least four apartments.

BC Builds

Along with the tax measures, the province is providing more clarity on the rollout of its BC Builds program.

The 2024 budget earmarks $198 million over the next three years for the initiative, which uses government-owned land and provincial financing to encourage rental construction.

Of that money, $50 million in operating funding and $14 million in capital funding is committed for 2024.

The program aims to cut project build times from years down to 12-18 months. All units will be means tested, and one-fifth of apartments will be held at 20 per cent below market rates.

Housing Market Activity Picks Up to Start 2024

Wed, 14 Feb 2024 18:56:07 GMT

Vancouver, BC – February 13, 2024. The British Columbia Real Estate Association (BCREA) reports that a total of 3,979 residential unit sales were recorded in Multiple Listing Service® (MLS®) systems in January 2024, an increase of 29.4 per cent from January 2023. The average MLS® residential price in BC in January 2024 was up 10.5 per cent at $957,909 compared to an average price of $866,922, the low-point for average prices over the past two years. The total sales dollar volume was $3.8 billion, an increase of 42.9 per cent from the same time in the previous year.

"Home sales are on a clear uptrend to start 2024," said BCREA Chief Economist Brendon Ogmundson. "A sharp decline in fixed mortgage rates and expectations for future Bank of Canada rate cuts is driving sentiment in the market and bringing pent-up demand off the sidelines."

The total number of active listings, though up year-over-year, remains relatively low by historical standards. New listings activity has shown signs of normalizing following a down year in 2023. A steady pace of new inventory will be crucial in keeping markets balanced as sales accelerate.

BCREA is the provincial association for BC REALTORS®. As a champion for the real estate sector, BCREA advances REALTOR® professionalism and ensures the REALTOR® voice is heard for the benefit of consumers and communities, across BC. By working in collaboration with the province's real estate boards and association, our mission is to provide professional development opportunities, advocacy, economic and policy research, and standard forms so REALTORS® are trusted, respected, and proud of their profession.

For detailed statistical information, contact your local real estate board. MLS® is a cooperative marketing system used only by Canada's real estate boards to ensure maximum exposure of properties listed for sale.

Federal government extends foreign buyer ban on Canadian homes to 2027

Mon, 05 Feb 2024 16:39:15 GMT

OTTAWA -

The federal government will continue to ban foreign nationals from buying homes in Canada for another two years as housing affordability concerns continue to trouble cities across the country.

Finance Minister Chrystia Freeland made the announcement today, saying Canada is extending its foreign homebuyer ban up until 2027.

Under the ban, which first came into effect in 2023, foreign commercial enterprises and people who are not Canadian citizens or permanent residents will continue to be prohibited from purchasing residential property in Canada.

Freeland issued a statement saying the extension will ensure houses are used for homes for Canadians and families and do not become a speculative financial asset class.

She says the government plans to use all tools possible to make homes more affordable across Canada.

The initial foreign homebuyer ban was set to expire on Jan. 1, 2025.

This report by The Canadian Press was first published Feb. 4, 2024.

Source

Metro Vancouver Home Prices, Sales Expected To See Uptick In 2024

Thu, 18 Jan 2024 20:06:04 GMT

The fundamental factors of Metro Vancouver's real estate market — population growth and household formation — remain strong, and 2024 is "poised to be a growth year for the residential market," according to a forecast published by the Real Estate Board of Greater Vancouver (REBGV) last week.

Entering the new year, inflation is no longer an immediate threat like it was entering 2023, when there were concerns about a recession. Inflation is declining slowly, but declining nonetheless, and REBGV notes that bond and derivative markets are also now pricing in over 1.00% of anticipated interest rate cuts from the Bank of Canada, with much of those cuts expected in the first half of the year.

"These factors have the spring and summer markets coiled and ready for a strong first half to the year," says the REBGV.

REBGV is expecting a 0.50% decrease in the Bank of Canada policy rate, at a minimum, and is thus projecting an increase in sales activity.

After 2023 ended with a total of 26,249 units sold, REBGV is projecting 2024 to see 28,250 units sold — an increase of 7.6%.

By property type, condominiums are projected to see a 9.7% increase, from 13,678 units sold to 15,000. Single-detached homes are then projected to see a 5.7% increase, from 7,556 units sold to 8,000. Townhouses are projected to see a 4.3% increase, from 4,793 units sold to 5,000.

Residential sales forecast by property type.(REBGV)

Near-record-low inventory levels will continue to shape the market, and there is little to no welcome news when it comes to housing affordability. Demand remains consistent, and if market activity sees an increase like what is expected, prices are very likely to continue on their upward trajectory, REBGV says.

"Even moderate increases in demand could lead to renewed price escalation, as the pool of willing buyers continues to exceed the stock of available homes for sale," REBGV said. "This is the same dynamic we observed in 2023, and since inventory levels are only slightly higher than 2023 levels at the time of publication, we do not expect this dynamic to differ significantly in 2024."

Entering 2023, REBGV forecasted the composite residential benchmark price to reach $1,200,000. The year ended with the benchmark price at a slightly higher $1,287,000.

"While the significant increase in borrowing costs over the course of 2023 led many forecasters to speculate that prices would decline during the course of the year, our modelling work suggested the opposite," REBGV said. "The simple reason for this contrarian view at the time was that the availability of resale homes was too low to lead to any significant price declines. While resale inventory levels have crept upwards since the mid-point of 2023, a longer-term perspective reveals that inventory is still hovering near historic lows."

As a result of this, REBGV is expecting prices to increase modestly this year, to $1,320,000 — a 2.6% increase.

Single-detached homes are expected to see the largest price increase, 3.9%, bringing the benchmark price to $2,200,000. Townhouses are expected to see an increase of 2.1% that will bring their benchmark price to $1,300,000. Condominiums are forecasted to see an increase of 1.4%, bringing the benchmark price to $825,000.

Residential price forecasts by property type.(REBGV)

"With core measures of inflation finally receding to levels nearing the Bank of Canada’s target range of 1% to 3%, the risk of runaway inflation that preoccupied most of early 2023 (thankfully) now feels like a distant memory," says REBGV. "Offsetting this rosy picture, however, is the fact that the forces causing inflation to recede are related to slowing economic growth."

Unemployment remains near record lows, but slowing economic growth is of some concern. If unemployment increases and/or the economy heads into recession, residential sales could slow significantly as a result of reduced demand, and prices could also be lower than expected.

On the other hand, sales activity and prices could both be higher than forecasted if we avoid a recession and borrowing costs fall more than expected.

The Bank of Canada's next policy rate announcement is set for Wednesday, January 24.

Canadian Inflation (December 2023) - January 16, 2024

Tue, 16 Jan 2024 18:35:56 GMT

Canadian prices, as measured by the Consumer Price Index (CPI), rose 3.4 per cent on a year-over-year basis in December, up from a 3.1% increase in November. The increase was largely driven by base-year effects from gasoline, which were low in December of 2022. Excluding energy costs, CPI rose 3.7 per cent year-over-year in December, down from 3.8 per cent in November. Shelter costs continue to be a major driver of inflation, with mortgage interest costs up 28.6 per cent and rent up 7.7 per cent from last year in December. Grocery price inflation remained unchanged from November at 4.7 per cent year-over-year in December. Month over month, seasonally adjusted CPI rose 0.3 per cent. In BC, consumer prices rose 3.4 per cent year-over-year. The Bank of Canada's preferred measures of core inflation, which strip out volatile components, remained between 3.5 and 4 per cent per cent year-over-year in December.

Despite a disappointing uptick in the year-over-year percentage change in CPI, the general picture remains similar. CPI is stubbornly high, still within the 3-4 percent territory that it has occupied since roughly the spring. Although gasoline prices drive volatility in the measure, including most of the December increase, shelter and food costs remain well above their pre-pandemic norms and are causing the CPI to remain broadly elevated. The annualized 3-month percentage change in the Bank of Canada's preferred measures of inflation, including CPI-median and CPI-trim, both ticked up last month and remain between 3 and 4. Amid tepid GDP growth and softening labour markets, financial markets continue to expect the Bank of Canada to cut rates substantially by the summer of 2024, but this will, of course, depend on the rate of economic growth and price appreciation in the first half of the year.

Source: BCrea

Real Estate Presale Trends: January 2024 Report

Mon, 15 Jan 2024 19:06:14 GMT

Introduction

As we delve into the dynamics of the real estate market at the beginning of 2024, it's evident that the presale segment displays a unique blend of challenges and opportunities. This report aims to shed light on the trends and patterns that have emerged in January 2024, offering insights into what can be expected in the real estate sector going forward.

December's Slowdown and January's Recovery

The year started on the heels of a somewhat sluggish December. However, January has shown promising signs of recovery. Key launches like Mosaic's Town & Centre and Anthem's South Yards (Tower B) have performed remarkably well. These successes can be attributed to their strategic launch timings, which cleverly navigated through minimal market competition.

The 2024 Outlook: Interplay of Factors

Looking ahead, the real estate market 2024 is expected to be influenced by a complex interplay of factors. Interest rates, affordability issues, and overall market dynamics will play crucial roles. One positive note is the anticipation of a strong presale market buoyed by continuous immigration and the escalating construction costs.

January's Presale Launches

This month is particularly notable for launching three major presale projects, introducing 785 units. Among these, Marcon's Soenhaus and Concord Pacific's Piano are particularly noteworthy. These developments add to the market’s diversity and signify the developers' confidence in the current economic climate.

The Lunar New Year Marketing Push

An exciting aspect of this month's market activity is the alignment with the Lunar New Year celebrations. Developers like Grosvenor, Streetside, and Qualex-Landmark are capitalizing on this festive season to attract potential buyers. Their projects - Brentwood Block, Juno, and Ironwood, respectively - are expected to draw significant attention, leveraging the celebratory mood and the auspicious significance of the Lunar New Year in many cultures.

Conclusion

As we progress through 2024, the real estate market, particularly in the presale sector, shows signs of an exciting blend of resilience and adaptability. Despite the challenges posed by external economic factors, there is a sense of cautious optimism. With strategic launches and marketing efforts aligning with cultural festivities, developers are navigating the complex market landscape with innovative approaches. This sets a precedent for an intriguing year ahead in the real estate domain.

The 2023 Housing Market was Defined by High Rates and Slow Sales

Mon, 15 Jan 2024 18:46:28 GMT

Vancouver, BC – January 15, 2024. The British Columbia Real Estate Association (BCREA) reports that 73,109 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in 2023, a 9.2 per cent decline from 80,506 units sold in 2022. The annual average MLS® residential price in BC was $971,144, a 2.6 per cent decrease from $996,943 recorded the previous year. Total sales dollar volume was $71 billion, an 11.5 per cent decline from 2022.

“The highest mortgage rates in over 15 years led to the slowest sales in a decade for BC,” said BCREA Chief Economist Brendon Ogmundson. “With mortgage rates falling to start the year and the potential for Bank of Canada rate cuts on the horizon, the outlook for 2024 appears much brighter.”

A total of 3,596 residential unit sales were recorded in Multiple Listing Service® (MLS®) systems in December 2023, an increase of 2.6 per cent from December 2022. The average MLS® residential price in BC was $965,447 a 6.5 per cent increase from $906,356 recorded in December 2022. Total sales dollar volume was $3.5 billion, a 9.3 per cent increase from the same time last year.

source

B.C. property assessments show home values have stabilized after years of big gains

Wed, 03 Jan 2024 18:18:40 GMT

The assessed value of properties in B.C. has stabilized on average, with some outliers such as Lytton, Haida Gwaii and Tumbler Ridge recording big jumps in worth.

According to statements released Tuesday by the B.C. Assessment Authority, property values as of July 1, 2023, changed on average between minus 10 per cent and plus five per cent.

In the Lower Mainland, the range was between minus five per cent and plus five per cent.

“Across the Lower Mainland and throughout B.C., the overall housing market has generally stabilized in value,” said B.C. Assessment’s lead assessor, Bryan Murao.

“Most homeowners can expect only modest changes in the range of minus five per cent to plus five per cent. These assessment changes are notably less than previous years.”

For example, the average detached home in Vancouver rose in value nine per cent in 2022 and 16 per cent in 2023.

“Commercial and industrial properties are generally increasing in value at a higher rate than residential, especially in areas such as the Fraser Valley where properties are up in value as a result of limited industrial land,” Murao said.

Andy Yan, the director of Simon Fraser University’s City Program, said the flattening of prices was due primarily to the Bank of Canada’s policy over the past two years of raising interest rates as a way to cool inflation.

Yan also noted that the recent assessments were made on July 1, 2023, before the provincial government introduced legislation forcing municipalities to allow densification, a move that will likely impact prices moving forward.

“The new legislation may not necessarily immediately lead to increased values, but set a floor of pricing expectations that current owners are reluctant to leave,” he said, noting 41 per cent of home owners in Metro Vancouver do not have a mortgage.

Realtor Steve Saretsky agreed that the jump in interest rates had led to stalled property values. He said that since July 1, 2023, the housing market had further softened but could pick up this spring if the Bank of Canada brings its benchmark interest rate down.

For the Lower Mainland region, the overall total assessments values increased from about $1.94 trillion to nearly $2 trillion.

Almost $27.2 billion of the region’s increased assessments is from new construction, subdivisions and the rezoning of properties. B.C. Assessment’s Lower Mainland region includes all of Greater Vancouver and the Fraser Valley, as well as the Sea to Sky area and the Sunshine Coast.

At the top end, for a single-detached home, assessed values went up four per cent in Vancouver, Burnaby and Coquitlam. The average detached home’s value in Vancouver is now $2,209,000.

The average assessed value of a detached home in Surrey didn’t budge, sitting at $1,609,000. The worst performer in the region was the District of Hope, which had a 13 per cent decline in assessed value with an average detached home now worth $611,000.

The value of a detached home in Hope rose 14 per cent last year, and 45 per cent the year before during the COVID-19 real estate boom when buyers were seeking properties outside the city.

In a big change over last year, the average assessed value of a detached home in Whistler went down two per cent and is now $2,842,000. Last year a detached Whistler home rose in value 11 per cent, and 29 per cent the year before.

When it comes to the strata property class (condos and townhouses), the best performer in the Lower Mainland was Richmond, where the average condo went up in value four per cent to $779,000.

Vancouver Island had the same range of movement in assessed value as the Lower Mainland — between minus five and plus five per cent.

However, this was skewed by a very strong performance in the north of the island that outweighed an overall decline in value across Greater Victoria and the Central Island.

Figures shows a drop in value in all Greater Victoria’s 14 assessment regions, with detached homes in Colwood and Esquimalt falling three per cent.

In the Central Island, on average a detached home in Lake Cowichan fell nine per cent, while the drop was four per cent in Ladysmith.

In the North Island, a detached home in Port Alice rose 34 per cent, Port McNeill 15 per cent, Alert Bay 20 per cent and Tahsis 10 per cent.

Vancouver Island deputy assessor Matthew Butterfield said the large increase in values in smaller North Island communities was due to strong demand and lack of supply.

Southern Interior deputy assessor Boris Warkentin said that his region had value changes somewhere between minus 10 per cent and plus five per cent. Kelowna, Penticton, Summerland, Princeton and Salmon Arm all had a drop in the assessed value of a detached home, while those values rose in Armstrong, Vernon and Coldstream.

Warkentin said the value of properties in the fire-ravaged community of Lytton rose 26 per cent due to increased market activity.

Northern B.C. had a similar rate of change as the Southern Interior, with the exception of Haida Gwaii (increase 22 per cent) and Tumbler Ridge (increase 19 per cent).

Bank Of Canada To Drop Interest Rate To 2.25% By 2025: TD

Wed, 03 Jan 2024 18:02:21 GMT

The Bank of Canada (BoC) will drop its policy interest rate to a much more attractive 2.25% by 2025, according to a recent forecast from TD.

The long-term forecast, written by TD CFA James Orlando and Director Thomas Feltmate, predicts that inflationary pressures will ease over the medium term, allowing the central bank to cut its policy rate back to the neutral rate of 2.25%.

This would cut the interest rate, which currently sits at 5%, by more than half — a move that would be extremely welcomed by borrowers saddled with, in many cases, prohibitively high mortgage payments.

In recent months, borrowers have increasingly struggled with affordability. Would-be homebuyers have moved to the sidelines, either unable to qualify for a mortgage or voluntarily holding off until interest rates comes down. As a result, home sale numbers have dropped in major markets all across the country.

Those already holding a mortgage, however, are greatly feeling the pain. A recent survey from Zolo found that nearly half of Canadian mortgage holders are worried about their mortgages renewing at much higher rates. Another TD report released earlier this month found that by the end of 2023, nearly 50% of all mortgage holders will see their monthly payments increase in comparison to February 2022 — the month before the Bank of Canada (BoC) embarked on its rate hike campaign. By the end of 2024, that share rises to 65%. The average mortgage holder is expected to see their monthly payments increase by nearly 30% by the end of 2024.

The Canada Mortgage and Housing Corporation (CMHC) is similarly bracing for borrowers facing difficult payment increases, with new research finding that homeowners renewing their mortgages over the next two years could see a 30% to 40% increase in their average monthly payments. On a $500,000 mortgage with a five-year fixed-rate term and a 25-year amortization period, for example, a rate increase from 1.94% to 5.45% would result in a $950 jump in their monthly payments.

A bright spot for those having to renew is that some mortgage terms have already fallen below the 5% interest rate mark. Around mid-December, some institutions like Equitable Bank, THINK Financial, and MCAP began offering five-year insured fixed-rate mortgages at slightly more appealing rates. This shift towards lower rates is due to the bond yield market — which fixed rates are based on — cooling over the past month.

But as higher rates continue to weigh on borrowers, TD found that mortgage holders have pulled back their spending by approximately 1% compared to those without a mortgage, resulting in a $6B reduction in spending across the economy. In the absence of higher mortgage rates, TD said growth in real consumer spending would have come in at approximately 1.9% year over year in Q3. Instead, it came in at 1.5%.

In their forecast, TD predicts that inflation will end the year at an annual rate of 3.8% before falling to 2.7% in 2024, 2.1% in 2025, and 2.0% in 2026 — the BoC's target for inflation. After hitting a 40-year high of 6.8% in 2022, inflation has come down quite a bit this year, signalling good news ahead for Canadian spenders.

source

Why the Bank of Canada could cut interest rates much more than markets expect

Mon, 04 Dec 2023 18:48:50 GMT

The Bank of Canada is widely expected to hold its benchmark interest rate when it meets next week, but a lot has changed since October.

Cooling inflation, here and south of the border, and a weakening economy have turned markets’ attention from rate hikes to rate cuts.

Investors are now fully pricing in a 25 bps rate cut by April, a 75 per cent chance by March and even a 20 per cent chance by next week.

Stephen Brown, deputy chief North American economist for Capital Economics, thinks odds of a cut as early as next week are way off the mark, but also believes markets are underestimating the degree of policy loosening to come in 2024.

Capital expects the Bank will tone down or even drop its tightening bias next week because of developments since its last meeting in October.

Oil prices, a big driver of inflation, have fallen back after a spike over the Israel-Hamas war to below what the Bank forecast in its October monetary policy report. Gas prices are at their lowest since March.

Capital now expects that headline inflation will average 3.1 per cent this quarter compared to the Bank’s forecast of 3.3 per cent.

The economy is also looking weaker than the Bank expected, said Brown. Gross domestic product data out today showed the economy in the third quarter shrank at a 1.1 per cent annualized pace, weaker than the Bank’s forecast of 0.8 per cent.

Other indicators support this. “According to the CFIB Business Barometer, the share of firms suffering from insufficient domestic demand jumped to 44 per cent in October, which implies that GDP is close to 1.5 per cent below its potential,” said Brown.

He also expects that jobs data out tomorrow will show a small rise in unemployment and slowing wage growth, “which should help to soothe the Bank’s lingering fears about wage pressures.”

Despite some tough talk on inflation, Bank of Canada governor Tiff Macklem “has now dangled the prospect of rate cuts a few times,” said Brown.

The governor repeated last week that cuts can begin before inflation falls to the 2 per cent target as long as there is a clear trend that it is headed that way.

Capital estimates that the Bank will need to see this trend for almost six months, making March or April the most likely meetings for cuts to begin.

But while markets expect only 95 bps of cuts over 2024, Capital believes the Bank will need to cut more than twice as much.

“The main reason we disagree with market pricing is that, based on our inflation forecasts, 100 bp of cuts would not be enough to prevent the real stance of policy from becoming more restrictive,” said Brown.

“In other words, the Bank will need to deliver 200 bp of cuts just to prevent monetary policy weighing even further on economic growth.”

One sticking point could be the housing market. While home prices are coming down, the Bank may take a more cautious approach to avoid fuelling another rally.

Yet, the sales-to-new listing ratio recently fell to its lowest since 2013, meaning that home prices could drop even more than the 5 per cent Capital is predicting by March.

“At a time when house price declines are gathering pace, … right now one can just as easily make the opposite argument that the Bank will need to act aggressively to prevent the housing market from falling into a tailspin,” he said.

Consumer credit has slowed to its slowest pace in 30 years, and when adjusted for inflation National Bank economists estimate that it has actually fallen by 1 per cent. The last time household credit fell in Canada it was the great recession of the 1990s, which the prime rate hit 14 per cent and the jobless rate was 12 per cent, said National economist Stéfane Marion.

“There is simply no precedent for a contraction in household credit of the current magnitude, while the unemployment rate remains below 6 per cent,” wrote Marion.

“Let’s hope that the next employment report on Friday doesn’t show too much of a deterioration in hiring, otherwise the credit cycle will continue to deteriorate.”

Source

Consumers overestimating how low, and how fast, interest rates will fall: economists

Wed, 01 Nov 2023 20:08:42 GMT

With interest rates likely at or near their peak in Canada, experts say consumers shouldn’t expect rates to return to pre-pandemic levels.

The central bank is more likely to bring its overnight rate to between two and three per cent, though not anytime soon, said David Macdonald, senior economist with the Canadian Centre for Policy Alternatives.

“That’s a ways off. That’s not next year,” he said, adding that consumers may not have fully grasped this yet.

The Bank of Canada on Wednesday held its overnight rate at five per cent, after a breakneck tightening cycle from near-zero in March 2022. The overnight rate affects interest rates offered by financial institutions.

The Bank of Canada’s overnight rate was 1.75 per cent throughout 2019, before the central bank dropped it to a quarter of a point to support the economy during the onset of the COVID-19 pandemic.

The central bank is widely expected to hold rates high in the near term as it seeks to quell inflation. But even once rates begin to fall, economists said ultralow rates aren't in the cards.

The Canadian economy, and consumers along with it, is going through an accelerated paradigm shift, said TD chief economist Beata Caranci -- less a gradual shift than a cold glass of water to the face.

Caranci thinks Canadians are aware that interest rates aren’t going back to pre-pandemic levels, but she also thinks they’re too optimistic about when, and how fast,rates will go down.

Borrowers have been increasingly opting for shorter terms on their mortgages, hoping rates will be lower in a year or two, she said.

Thatmay well happen, but it’s not a guarantee, she said.

“If you look at our forecast, if you look at the consensus on the street ... Most people have some cuts coming in by the second half of next year. But that's presumed that the economy is weaker than it is today,” said Caranci.

“One of the points I've been stressing with our clients is, the speed at which rates went up will not be the speed at which they go down.”

In a report Wednesday, CIBC Capital Markets chief economist Avery Shenfeld said the central bank will likely be able to ease its overnight rate to 3.5 per cent by the end of next year.

A term that’s often used to describe where the overnight rate may go -- or where it should go -- is the neutral rate. That’s essentially the “Goldilocks” of the central bank’s rate, explained Caranci: “It's an interest rate that allows the economy to grow neither too hot or too cold.”

In an Oct. 5 report, Caranci and senior economist James Orlando wrote that they believe the neutral rate in the U.S. is on the rise due to factors like climate change investment, changing supply chains and higher government deficits.

“A higher neutral rate means that the current policy rate may not be as restrictive as the (U.S. Federal Reserve) thinks,” they wrote.

A similar trend is at play in Canada, according to Caranci and Orlando, but Canadian consumers' high debt levels mean a lower neutral rate north of the border.

Prior to the pandemic, rates in Canada and globally had been historically low for years, said Macdonald -- because inflation had been low for decades.

Rates were as low as half a percentage point during the past decade, including for a two-year stretch between July 2015 and July 2017. Over the past 10 years, the average overnight rate was 1.27 per cent.

There are downsides to having very low rates, said Macdonald, including the fact that when recession hits, the central bank has very little room to stimulate the economy by lowering rates further.

Over the years, low rates also contributed to a housing boom, he said. The Bank of Canada’s mandate is to keep inflation in check, Macdonald said, but home prices aren’t included in the Consumer Price Index.

The seasonally adjusted average price of a home in September was $669,689, according to the Canadian Real Estate Association, a 70 per cent increase from $392,647 a decade earlier and a 216 per cent increase from $211,893 in September 2003.

This “explosion” in home prices drove substantial wealth inequality over time, said Macdonald, as anyone lucky enough to have their foot in the door at the right time saw their wealth grow, while others were left behind.

He agrees that Canadians are now in a “difficult period of adjustment,” where household budgets are being eaten up by mortgage costs, rent is on the rise and house prices are expected to moderate. That adjustment has really just begun, he said.

“We’ve still got a long way to go at these much higher interest rates and much higher inflation.”

-- With files from Nojoud Al Mallees

This report by The Canadian Press was first published Oct. 27, 2023.

source

Most of Canada’s New Condos Are (Still) Investor Owned: Stat Can

Wed, 01 Nov 2023 19:59:50 GMT

Real estate speculation is a national sport in Canada, but it may have gone over the line. The Statistics Canada (Stat Can) Canadian Housing Statistics Program (CHSP) released data showing the share of newly constructed condos owned by investors in 2021. The data reveals that most units are investor owned, amplifying concerns of financialization and ownership concentration. Both issues lead to inefficient markets that aren’t just difficult for the public, but increase vulnerability in the event of an economic downturn.

Canadian Real Estate Investor Market Share & Commoditization

Canada has seen the rapid financialization of housing, and that can be an issue. “In the context of housing affordability, concerns about financialization and the concentration of ownership in the real estate market have emerged in recent years,” wrote the CHSP, in the accompanying notes with the data.

Financialization is when housing is treated as a commodity to trade, rather than serving a need. Everything is commoditized to some degree, but the deeper the financialization the less connected the asset becomes to its use.

In the case of housing, rather than landlords collecting rental yield, they may start trading the homes as speculative properties detached from any value. That can lead to rents that are no longer connected to incomes, resulting in greater social liabilities. Greater social liabilities tend to produce greater corrections.

Concentration of ownership can also present a concern when it comes to essentials. A greater share of investors that trade based on financialization, the more distorted markets become. When housing is treated as a commodity disconnected from its need, it’s prone to more violent economic corrections. It’s a problem that was prominent during the Golden Age of Colonialism, and it’s popping up again. Once again, the more disconnected the worse the correction.

Most of Canada’s New Condo Supply Is Investor Owned

Most of Canada’s new condos continue to be investor owned, driven by larger provinces. Investors owned most condo units built after 2016 in Ontario (57.3%) and Nova Scotia (58.8%). It wasn’t quite half in BC (49.3%), but it got closer. Most of Canada’s new supply has been delivered in these provinces, meaning it skews ownership across the country.

Investors Own Most of Canada’s New Condo Supply

The share of condos built after 2016 that are owned by investors.

*CA includes the five provinces with data from the CHSP. They will be gradually adding more provinces in the coming months.

Source: Stat Can; Better Dwelling

Only two of the tracked provinces have seen major declines in the share of investor-ownership. New Brunswick saw the share of investor owned new condos drop 18.7% to 31.3% in 2021. Manitoba wasn’t as extreme, but still saw a big 9.9% decline to 39.4% of new condos.

Most housing built after 2016 is investor owned, presenting an ownership concentration issue. The issue becomes even more problematic when you consider this is the share of owners that kept the unit as an investment. Virtually all pre-construction is sold to investors in major markets, distorting them even further.

Source

Government of Canada "Actively Examining" Action On Short-Term Rentals

Fri, 20 Oct 2023 18:15:12 GMT

The jury is still out on whether British Columbia's recently announced actions against illegal short-term rentals will have their desired effects, but it's now received a big endorsement from Minister of Finance and Deputy Prime Minister Chrystia Freeland, who says the federal government is following suit.

At a joint press conference with Minister of Innovation, Science, and Industry François-Philippe Champagne and Treasury Board President Anita Anand on Tuesday, Freeland announced that she was designating the Ombudsman for Banking Services and Investments (OBSI) as the single external complaints body for Canada's banking sector.

She then closed her remarks by shouting out British Columbia.

"I also want to quickly address the BC government's new legislation to regulate the short-term rental market," said Freeland. "This is a positive and important step in the right direction, in an area of provincial jurisdiction."

Freeland then said what many governments around the world have said: short-term rentals need to be converted into long-term rentals.

"We know that short-term rentals through sites like Airbnb and Vrbo mean fewer homes for Canadians to rent and live in full-time, especially in urban and populated areas of our country," she said. "That is why our government is actively examining what options and tools exist at the federal level, to ensure more short-term rentals are made available as long-term rentals — as permanent homes — for Canadians to live in."

Freeland concluded by saying that the Government of Canada will have more to announce in the weeks to come.

The War On Short-Term Rentals

A day prior to Freeland's comments, the Province of British Columbia announced the Short-Term Rental Accommodations Act, which included a suite of actions such as creating a provincial registry for platforms and hosts, increasing fines for infractions, and requiring platforms to share more data.

With the announcement, BC joined a growing list of governments around North America that are cracking down on short-term rentals in the name of alleviating pressures on their respective housing markets. That list includes Barcelona, Vienna, and New York City, among others. In Canada, both Quebec and Halifax recently announced actions as well.

It's unclear what the Government of Canada can really do, however, as short-term rentals are an area of provincial jurisdiction, rather than federal jurisdiction — a reality Freeland acknowledged on Tuesday. Despite that, Freeland said housing is such a big issue that the federal government is looking at everything.

"It is so important that we are examining whether there are any tools in the federal jurisdiction that we could use, that would make a difference in this space," Freeland said. "And the reason we're so focused on it is we really do understand that housing is a very challenging issue for Canadians, and we believe that the core challenge is that there just aren't enough homes available for people to buy or for people to rent, so we're reviewing the space and we're thinking 'what can we do in both the medium-term and immediately to relieve some of the pressure."

She went on to cite an estimate that 30,000 units of housing could be added back to the market in just Vancouver, Toronto, and Montreal if action were to be taken.

"That would make a big difference," she said. "And that's why, recognizing — as we do — that this is in provincial jurisdiction, we are taking a very careful look at whether there are any tools in the federal toolbox we could use as well. But if other provinces want to follow BC's lead, that would be great for Canadians, too."

Source

B.C. government orders 60,000 new homes built in 10 municipalities the next five years

Wed, 04 Oct 2023 18:00:34 GMT

The B.C. government has ordered 10 of the largest municipalities in the province to build more than 60,000 new units of housing over the next five years — or face consequences.

Housing Minister Ravi Kahlon announced the exact numbers for net new units in the 10 municipalities on Tuesday, months after the province first said those communities would be targeted as part of the government's push for additional housing supply.

"We're taking action and working with municipal partners to make sure more homes are built in communities with the greatest housing need," said Kahlon in a statement.

"The targets include thousands of below-market rental units for the largest and fastest-growing communities. This means more people will be able find a home in the community they love."

The 10 municipalities are Vancouver, Victoria, Kamloops, Abbotsford, Delta, Saanich, North Vancouver District, Port Moody, Oak Bay and West Vancouver.

Overall, the number of units they're being asked to add to their housing stock in the next five years ranges from 28,900 in Vancouver to 664 in Oak Bay — but when adjusted for population, all 10 would see an increase of units between eight and 14 per cent by 2028.

In addition, the province has put in place separate sub-targets for each municipality by year, by whether the units are rentals or ownership, by whether the rentals are market or below market, and by number of bedrooms.

If municipalities fail to meet their targets, the government has said they retain the option of appointing an adviser or issuing a directive that could usurp the traditional jurisdiction of municipalities to oversee land use within their boundaries.

Eby in Ottawa

Kahlon said the 10 chosen communities were selected through "an objective, thorough and measured process" that factored in metrics, including projected growth, housing and land availability, affordability, community infrastructure and "unrealized potential in developing more homes."

Premier David Eby, who has spent two days in Ottawa meeting with federal ministers and Prime Minister Justin Trudeau, says affordable housing would be made available quicker with the co-ordination of all levels of government.

He says the federal ministers were receptive to that pitch.

Eby's trip to Ottawa comes after the federal government announced a $4 billion Housing Accelerator Fund in its 2022 Budget that would provide incentive funding to local governments to encourage initiatives that lead to new housing supply.

"My understanding is the federal government is close to being able to make announcements in terms of the allocation of that funding to support growth in cities, which is very good news," Eby told reporters Tuesday.

"The challenge or the opportunity, I guess, is to co-ordinate that municipal accelerator program with the cities that our housing minister has been working with on housing targets."

The premier said he also made "very good progress" in advancing the interest of B.C. residents in his meetings with the federal ministers, noting he is "particularly happy" with his discussions around how the federal and provincial governments can work together to support the clean energy sector.

Source

Coquitlam Approves Increases To Development Cost Charges

Wed, 04 Oct 2023 17:54:22 GMT

The City of Coquitlam has approved increases to its rates for development cost charges (DCCs), increasing the price to build in a municipality that's become very popular among developers in recent years.

In Coquitlam, development cost charges are levied on all development applications with a construction value below $150,000, and the City uses the revenue to help pay for expanding necessary infrastructure, including transportation, water, sewage, drainage, and parks.

Development projects that require rezoning are also subject to community amenity contributions (CACs), but DCCs for non-residential projects are very low, so as to not hinder economic growth.

Like many other municipalities, the City of Coquitlam reviews its DCCs regularly and adjusts the rates in order to reflect the economy and growth trends. As part of this process, the City is now raising all of its DCCs by 4.5%, reflecting the 4.5% increase in the Vancouver Consumer Price Index published by Statistics Canada in April 2023.

Following the increase, the total DCC for single-detached homes is now at $63,141 — by far the highest of any type of development. Multiplex housing forms have a total DCC of $41,448 per unit, followed by rowhouses and townhouses at $37,418 per unit, and then multi-family complexes at $23,715 per unit.

"While this increase is below the construction cost escalations observed over the past year estimated at 10%, it helps the City's rates to keep up with the inflationary cost increases in the region," staff said in a recent report.

The 4.5% increase is relatively modest when compared to other municipalities. In Vancouver, rates for DCCs were set to increase by 8.3%, until Council opted to defer the increase until 2024 in order to avoid further worsening project viability for developers.

Earlier this year, the City of Surrey also increased its rates for DCCs, by 9.3%, which are now in effect. Although Coquitlam's increase of 4.5% is much lower, the actual DCC is higher in some cases. In Surrey, the total DCC charges for non-multi-family homes do not exceed $53,154. DCCs for multi-family homes are then charged according to square footage rather than per unit like in Coquitlam.

Coquitlam City Council granted a first, second, and third reading to the bylaw amendment earlier this month, before granting a fourth and final reading Monday evening.

Applications that are currently in progress will be protected, and the new rates will come into effect on Sunday, October 1.

Source

Tax wealthy homeowners to fund affordable housing, says new B.C. proposal

Thu, 31 Aug 2023 18:26:00 GMT

To improve affordable housing, a B.C. economist says the province needs a more progressive property tax system — one that raises levies on high-value properties and people who own multiple homes.

Such a policy, says Alex Hemingway, will raise billions of dollars for public housing projects while simultaneously dampening home price growth over the long term.

The policy proposal, laid out in a white paper published Wednesday with the Canadian Centre for Policy Alternatives of B.C., comes as residential property values have grown a “staggering” $1.7 trillion over the past two decades, leading to greater inequality among those who own a home and those who don't, says Hemingway.

“In terms of addressing the inequality that’s been created, that’s really where property tax comes front and centre,” Hemingway told Glacier Media in an interview.

Because property tax reform is both complex and contentious, Hemingway is calling on a citizen’s assembly to discuss options.

12% of B.C. households would pay more, says economist

Hemingway's proposals largely focuses on greater taxes on the priciest properties in B.C., but also reforms along the edges, such as greater emphasis on taxing land and not buildings, as a way to incentivize denser forms of housing.

To raise an extra $580 million annually, Hemingway proposes doubling the existing provincial property surtax on residential properties valued above $3 million (to 0.4 per cent) and $4 million (to 0.8 per cent), as well as adding a new bracket above $7 million (1.5 per cent).

To raise even more money, Hemingway suggests the provincial government apply extra property taxes on owners of multiple homes and properties valued at over $1.5 million. In such a scenario, just 12 per cent of B.C. households would pay more, adding about $2 billion for public housing projects.

That surtax, known as the Additional School Tax, was brought in by the BC NDP government in 2019 and is opposed by the opposition party, BC United.

“The B.C. government has taken some important but limited steps in recent years when it comes to taxing residential property wealth,” said Hemingway.

Lack of public investment adding to cost-of-living crisis

Hemingway said the existing surtax is a “drop in the bucket,” compared to recent gains in property values, which currently climb around $223 million annually.

Despite political opposition, Hemingway says polling shows high public support for taxing the wealthy.

“People recognize [higher home values] has been a stroke of luck, and it’s unintentionally come at the expense of others. And that’s corrosive on our social fabric,” said Hemingway.

Hemingway says public spending as a percentage of GDP has declined over the past generation.

“That lack of public investment has contributed to some of the cost-of-living crisis we’re seeing. And that’s why it’s sensible to be thinking about raising additional revenue,” he said.

Hemingway further proposes more complex changes to the current property tax scheme. By shifting tax away from buildings to the land itself, the government could incentivize building denser forms of housing, which Hemingway supports.

Hemingway says it’s also worth considering a consistent property tax rate, as opposed to having it fluctuate (historically downward) to align with government budgets.

“A first step would be to stop automatically cutting provincial property tax rates when property values rise faster than inflation. Holding rates steady wouldn’t raise much revenue initially, but if property values continue escalating, it would raise revenue and ensure more land value gains are captured for the public good,” wrote Hemingway.

To address declining property values, Hemingway suggests a rate floor, especially in regions where home prices are extremely out of line with local incomes.

Hemingway says governments may also want to consider expanding property tax payment deferrals until a property is sold. Currently, the deferral program only exists for homeowners over age 55 and families.

Under a higher property tax scheme, Hemingway said “we may want to expand and if not universalize that option.”

At the heart of Hemingway’s proposal is an effort to disincentivize housing, or land, as an asset class.

Open to 'tax shift' proposal to lower burden on low and mid-level earners

While not including it in his proposal, Hemingway says he supports a plan backed by the think-tank Generation Squeeze that would lower income and sales taxes to offset any hike in property taxes.

The plan seeks to cut provincial income tax on the first $30,000 an individual earns. B.C.’s second income tax rate would be eliminated, leaving earnings from roughly $40,000 to about $79,000 taxed at the rate of 5.06 per cent rather than 7.7 per cent. Furthermore, British Columbians would pay a provincial sales tax between five and seven per cent — all in exchange for a property surtax on properties valued at over $1 million.

“Right now we shelter housing wealth, especially high housing wealth, from taxation and we disproportionately draw on income taxation, including from middle and lower income renters, who aren’t benefiting from massive housing wealth growth,” said Paul Kershaw, a professor in public health at the University of British Columbia and head of Generation Squeeze.

Kershaw says his “tax shift” proposal — aimed at addressing generational wealth inequities — is needed to pay for the growing social and health needs of an aging population. For that reason, he said it only makes sense to draw revenue from that source, which happens to own much of the land in the province.

Source

Canadian New Home Prices Slip In July After Two Months Of Growth

Wed, 23 Aug 2023 18:59:56 GMT

Prices continued to edge upwards in the Canadian resale market last month — seeing a near-record rise, no less — but the same can’t be said for the new home segment, underlining the considerable headwinds facings homebuilders across the country.

Statistics Canada’s (StatCan) new housing price index fell by 0.1% between June and July, not only erasing the 0.1% increase observed the month prior, but marking the first dip since May. Prior to May, national new home prices had been trending downwards since August 2022.

New home prices slipped the most month over month in Victoria (-0.8%), followed by Greater Sudbury (-0.7%), Regina (-0.5%), and Ottawa (-0.5%), “with builders in many CMAs noting weakened market conditions as the reason for the reported monthly declines,” said StatCan on Monday.

Conversely, prices edged up month over month in Sherbrooke (+1.2%) and St. John's (+1.0%).

Year over year, new home prices slid 0.9% nationally. StatCan attributes this to borrowing costs, which have risen steadily since July 2022 and have served to hamper the new housing market. The government agency also points to the fact that there was 54.2% more unabsorbed inventory (single-family homes completed but not sold) in July 2023 over July 2022, according to the Canada Mortgage and Housing Corporation.

Locally, Victoria also led the year-over-year decline in July, with new home prices falling 3.7%. Prices also slipped in Edmonton by 2.9%. Meanwhile, the greatest year-over-year increases were observed in Québec (+3.5%), Calgary (+1.6%), and St. John's (+1.6%).

Industry “Downbeat,” Says Home Builders’ Associations

July’s overall price slide is another burden to bear for Canadian homebuilders, 67% of which are already scaling back their building endeavours given the pressures of the times according to a recent report for Q2-2023 from the Canadian Home Builders’ Association (CHBA).

What’s more, out of fear that they won’t secure the buyers necessary to render their projects worthwhile, 22% told CHBA they are axing projects completely.

“While the spring busy season helped prospective new home sales traffic somewhat, affordability challenges related to interest rates and construction costs remain very much a concern, and have been compounded by the July rate hike by the Bank of Canada shortly after Q2 survey data was collected,” said the organization earlier this month.

“Converting prospective buyers into sales remains a challenge, as do closings from previous sales. Due to the high interest rate environment, nearly half of CHBA’s panelists reported that buyers are requiring alternative lending solutions and one-third said they are needing to make accommodations for some buyers so they can close.”

All in all, said CHBA, the Canadian homebuilding industry “remains downbeat,” which spells dismal things for not only homebuilders, but the housing market at large.

Housing construction starts in Metro Vancouver up by 50% this year to date

Wed, 23 Aug 2023 17:58:06 GMT

New data from Canada Mortgage and Housing Corporation (CMHC) shows actual housing starts in Metro Vancouver over the first seven months of 2023 through the end of July were up by 50% compared to the same period in 2022.

A total of 211 single-family detached housing starts were recorded in July 2023 — down from 276 in July 2022.

But for all other housing types, a broad category that includes apartments, CMHC recorded 2,751 actual housing starts in July 2023 — up from 1,700 over the same month last year.

The total number of housing starts in Metro Vancouver in July 2023 reached 2,962 units — up from 1,976 in July 2022.

Province-wide, British Columbia saw a total of 4,002 housing starts in July 2023 — slightly up from 2,798 units in July 2022.

Generally, housing starts are defined as the beginning of construction work on the building.

For housing starts seasonally adjusted at annual rates (SAAR), based on a six-month moving average, CMHC recorded a total of 35,438 units in Metro Vancouver as of July 2023 — down from 46,282 in June 2022. Provincially, this rate was down by 25% to 47,730 units.

Nationwide, housing starts SAAR in July 2023 increased for the second consecutive month.

“Despite a decrease in the SAAR of housing starts relative to last month, July saw a healthy number of actual housing starts from a historical perspective. This pushed the trend of housing starts upward for the second consecutive month. Market intelligence suggests multi-unit projects started in June and July were likely financed a few months prior, so the effect of the most recent interest rate hikes on housing starts remains to be seen,” said Bob Dugan, the chief economist of CMHC, in a statement.

According to MLA Canada’s separate account for the combined areas of the real estate boards of Greater Vancouver and the Fraser Valley, there were five pre-sale project launches in July 2023 with a combined total of 326 pre-sale units. This is down from their June 2023 tally of 16 project launches with a combined total of 1,849 pre-sale units.

The pre-sale sold rate in July 2023 was 33%.

For August 2023, MLA Canada is forecasting four project launches with 804 pre-sale units, including 634 concrete units, 40 woodframe units, and 130 townhome units. The project launches at Shape Properties’ City of Lougheed and Anthem Properties’ Citizen are expected to drive August’s higher numbers.

“As predicted, a number of projects rushed to release in June before the summer slowdown. After hitting a monthly high for released inventory, July saw significantly less product typical of the summer season, and August is expected to be similar,” said Suzana Goncalves with MLA Canada in a statement.

“There is some current optimism driving a number of potential launches in the Fall but a looming Bank of Canada announcement early September is still creating some trepidation among developers while buyers look for long-term, pre-sale purchase opportunities.”

Comparable to Metro Vancouver, Greater Toronto also similarly saw a decrease in its housing starts SAAR, falling by 29% in July 2023. Conversely, over the same month, the regions of Montreal went up by 12%, Calgary went up by 33%, and Edmonton went up by 67%.

Actual 2023 year-to-date housing starts in Greater Toronto were 35% above the same first seven months in 2022.

source

Home Sales Up Nearly 400% Since Start of Year In Some Canadian Cities

Tue, 01 Aug 2023 18:36:28 GMT

In anticipation of falling interest rates, home sales and prices began to rise across Canada in February as sidelined buyers returned to the market. Although the Bank of Canada reignited its rate hike campaign in June, both metrics have continued to climb.

According to the latest figures from the Canadian Real Estate Association (CREA), home sales rose 1.5% month-over-month in June, while the Aggregate Composite MLS Home Price Index climbed 2% -- a "large increase for a single month."

From January to June, the unexpectedly frenzied spring market led sales activity to soar nearly 400% in some cities, while prices increased by as much as 19%.

With purchasers seemingly unperturbed by rising rates, Zoocasa compared home prices and sales activity from January and June to determine where buyers have bounced back.

Nationally, home sales have more than doubled, up 139.62% in June compared to January. But, of the 23 cities included in the real estate agency's report, 15 have seen even greater gains, while only one has seen sales rise by less than 100%.

Guelph experienced the most significant increase -- the number of homes sold in June was 387.38% higher than in January -- followed by North Bay, which recorded a 366.67% increase in sales over the same time period.

As the report notes, though, the aforementioned markets are on the smaller side and saw fewer overall sales -- 424 and 126, respectively, in June. When looking at larger cities with over 1,000 sales per month, Fraser Valley experienced the largest increase in activity, at 214.46%.

The Greater Toronto Area saw the highest number of home sales overall in June, at 7,480, a 141.29% jump from January, while Calgary's 3,996 sales marked a 162.38% increase from January.

The only region to not experience at least a doubling of sales was the Quebec CMA; activity was up 42.8% in June compared to January.

With sales soaring, and inventory low, prices have begun to creep up as well. The national average price hit $760,600 in June, a 7.89% increase from January.

In Sudbury, where sales have risen 195% since the start of the year, prices have increased by 19.22%. Despite the jump, the city's average home price of $456K is still considerably affordable.

Sitting at a comparable $408,900 in June, prices in North Bay have risen 11.57% since January. Even Quebec, with its comparatively slower increase in sales, saw prices rise 6.66% to $337,800 from January to June.

Concerning large markets, Fraser Valley once again led the way -- the city's average home price hit $1,040,900 in June, a 10.82% jump from January. The GTA trailed, with prices increasing 9.41% to $1,171,300 from January to June.

Montreal sat at the other end of the spectrum, with prices rising just 3.45% to $516,400. The city saw sales jump 102.51% from January to June.

Source

Bank of Canada raises policy rate 25 basis points, continues quantitative tightening.

Wed, 12 Jul 2023 16:38:56 GMT

The Bank of Canada today increased its target for the overnight rate to 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is also continuing its policy of quantitative tightening.

Global inflation is easing, with lower energy prices and a decline in goods price inflation. However, robust demand and tight labour markets are causing persistent inflationary pressures in services. Economic growth has been stronger than expected, especially in the United States, where consumer and business spending has been surprisingly resilient. After a surge in early 2023, China’s economic growth is softening, with slowing exports and ongoing weakness in its property sector. Growth in the euro area is effectively stalled: while the service sector continues to grow, manufacturing is contracting. Global financial conditions have tightened, with bond yields up in North America and Europe as major central banks signal further interest rate increases may be needed to combat inflation.

The Bank’s July Monetary Policy Report (MPR) projects the global economy will grow by around 2.8% this year and 2.4% in 2024, followed by 2.7% growth in 2025.

Canada’s economy has been stronger than expected, with more momentum in demand. Consumption growth has been surprisingly strong at 5.8% in the first quarter. While the Bank expects consumer spending to slow in response to the cumulative increase in interest rates, recent retail trade and other data suggest more persistent excess demand in the economy. In addition, the housing market has seen some pickup. New construction and real estate listings are lagging demand, which is adding pressure to prices. In the labour market, there are signs of more availability of workers, but conditions remain tight, and wage growth has been around 4-5%. Strong population growth from immigration is adding both demand and supply to the economy: newcomers are helping to ease the shortage of workers while also boosting consumer spending and adding to demand for housing.

As higher interest rates continue to work their way through the economy, the Bank expects economic growth to slow, averaging around 1% through the second half of this year and the first half of next year. This implies real GDP growth of 1.8% in 2023 and 1.2% in 2024. The economy will move into modest excess supply early next year before growth picks up to 2.4% in 2025.

Inflation in Canada eased to 3.4% in May, a substantial and welcome drop from its peak of 8.1% last summer. While CPI inflation has come down largely as expected so far this year, the downward momentum has come more from lower energy prices, and less from easing underlying inflation. With the large price increases of last year out of the annual data, there will be less near-term downward momentum in CPI inflation. Moreover, with three-month rates of core inflation running around 3½-4% since last September, underlying price pressures appear to be more persistent than anticipated. This is reinforced by the Bank’s business surveys, which find businesses are still increasing their prices more frequently than normal.

In the July MPR projection, CPI inflation is forecast to hover around 3% for the next year before gradually declining to 2% in the middle of 2025. This is a slower return to target than was forecast in the January and April projections. Governing Council remains concerned that progress towards the 2% target could stall, jeopardizing the return to price stability.

In light of the accumulation of evidence that excess demand and elevated core inflation are both proving more persistent, and taking into account its revised outlook for economic activity and inflation, Governing Council decided to increase the policy interest rate to 5%. Quantitative tightening is complementing the restrictive stance of monetary policy and normalizing the Bank’s balance sheet. Governing Council will continue to assess the dynamics of core inflation and the outlook for CPI inflation. In particular, we will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behaviour are consistent with achieving the 2% inflation target. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Source

Burnaby home prices still rising

Tue, 11 Jul 2023 18:07:51 GMT

Home prices continue to rise month-over-month in Metro Vancouver, and Burnaby is no exception.

Detached home and apartment prices have risen across the city, according to a new report by the Real Estate Board of Greater Vancouver (REBGV).

“Despite elevated borrowing costs, there continues to be too little resale inventory available relative to the pool of buyers in Metro Vancouver,” said Andrew Lis, REBGV’s director of economics and data analytics, in a news release. “This is the fundamental reason we continue to see prices increase month over month across all segments.”

In Burnaby, the estimated price of a typical property (called the benchmark price), ranged from about $1.03 million in north Burnaby to $1.19 million in east Burnaby. South Burnaby saw a benchmark price of $1.12 million last month across all property types.

North Burnaby saw a 0.9 per cent increase from May, east Burnaby a 2.7 per cent increase, and South Burnaby a 1 per cent increase from the previous month.

But in the last year, prices have dropped a little. North Burnaby saw its residential benchmark drop 3.7 per cent from a year ago – but it’s still up 26.8 per cent from three years ago.

And townhome prices in east Burnaby fell slightly since May, with a benchmark of $863,500 (down 1.3 per cent, but up 27.1 per cent from three years ago).

The REBGV is calling on the provincial government to adjust the threshold for the first-time homebuyers’ exemption from the property transfer tax.

The REBGV noted the benchmark price for apartments in the region is now $767,000 – while the current threshold for the first-time buyers’ tax exemption is $525,000.

“This is a simple policy adjustment that could help more first-time buyers afford a home right now,” Lis said.

In Burnaby last month, there were 65 detached homes sold (median selling price: $2 million), 67 attached homes (median price: $990,000), and 258 apartments sold (median price: $738,000), according to the REBGV data.

Benchmark prices for apartments

Burnaby East: $798,600 (up 1.2 per cent this month)
Burnaby North: $753,800 (up 0.1 per cent this month)
Burnaby South: $812,100 (up 0.8 per cent this month)

Benchmark prices for townhomes

Burnaby East: $863,500 (down 1.3 per cent this month)
Burnaby North: $903,500 (up 0.1 per cent this month)
Burnaby South: $997,800 (up 0.6 per cent this month)

Benchmark prices for detached homes

Burnaby East: $1.91 million (up 4.8 per cent this month)
Burnaby North: $2.04 million (up 2.9 per cent this month)
Burnaby South: $2.2 million (up 1.7 per cent this month)

Source

Canada's housing market is hot again — expect it to stay that way, economists say

Tue, 27 Jun 2023 23:05:13 GMT

The slowdown in the Canadian housing market that marked much of last year appears over as prices and sales increase, and that strength is likely to continue, clipping affordability even more, according to economists at Desjardins Group.

A spike in home sales and prices across Canada, brought on in part by the Bank of Canada’s pause in interest rate hikes earlier this year along with a lack of listings, is no fluke, said Desjardins economists Randall Bartlett and Hélène Bégin in their residential real estate outlook headlined, “For better and for worse, Canada’s housing market is back.” The economists said strength in prices and sales will have “staying power,” which will ultimately dent affordability even more. But the Bank of Canada can’t be blamed for this round of strength. Instead, a number of other factors are at play, including strong population growth, a resilient labour market and continued flush household savings accounts, built up during the pandemic, the economists said.

For one thing, immigration to Canada is growing, and newcomers to the country are flooding into the housing market. The group plays a strong role in housing market dynamics and are even more likely to own some types of dwellings, such as condos, than people born in the country, Desjardins said. But it’s not only immigrants driving demand, and non-permanent residents, the numbers of which have also surged, are searching for places to live, too. That’s spilled into the rental market, causing rents to spike. Then, as home prices fell last year and rents rose, more people found it made financial sense to invest their money in buying a home instead of shelling out the equivalent of a mortgage payment to a landlord. The result is more people entering the housing market, sending prices and sales higher.

A strong labour market is also helping to ignite housing further. Increases to wages and job security mean people are building more wealth, and buying homes with their money. At the same time, the jobs market shows no sign of slowing down in a meaningful way, the economists said, amid continued high vacancies and a low unemployment rate all while the country welcomes an influx of immigrants. That will help keep the housing market humming along. Meanwhile, wealth gains are also coming from massive amounts of savings built up over the pandemic. Of course, it’s high income earners who still have much of these savings. They’re also more likely to deploy that money into the housing market, helping keep the rebound going.

There’s another major factor contributing to high prices: supply. Housing starts have been higher than usual, but that won’t last, Desjardins said. What’s more, the housing that’s being built isn’t what buyers really want. Most starts are condos and they are shrinking in size even as detached homes, which carry the heftiest price tag, grow bigger and bigger. The result is a “missing middle” in supply, according to the Canada Mortgage and Housing Corp. If homebuyers can’t find the types of houses they’re seeking, that will send home prices heading even higher, as competition grows for a limited number of properties. And don’t expect prospective buyers to be saved by government initiatives designed to boost housing starts. “Despite ambitious policy announcements to the contrary, there is little meaningful relief in sight from any level of government,” the report said.

Still, higher interest rates might cool the market, at least a little. The Bank of Canada raised interest rates another 25 basis points in a surprise hike in June, bringing the key policy rate to 4.75 per cent. Desjardins expects the central bank will hike by another 25 basis points at least once more, with an increase coming as early as July. That might work to keep some people on the sidelines, helping to dampen price increases and sales. The economists also caution that the full effect of interest rate hikes has yet to be felt by people with fixed-payment variable-rate mortgages, whose banks have been adding any extra interest owed to the mortgage principal instead of requiring higher payments now, thereby extending amortization periods and kicking “housing and economic pain down the road.”

It won’t be enough to take the steam out of the market completely, however. “Despite higher interest rates, housing demand is expected to remain strong for the foreseeable future,” the report said.

All those factors are playing out differently in housing markets across Canada, with some areas feeling the effects more than others. For example, British Columbia and Ontario have experienced a spike in prices and sales amid an influx of immigrants. That’s pushed younger homebuyers from those provinces to other markets in search of affordability, and Alberta, along with the Prairies and Atlantic provinces, have benefited from the migration. But now that’s causing those regions’ home prices to creep higher. As far as Quebec goes, it’s not experienced much migration, but a lack of housing starts is eating into supply, threatening affordability, the economists said. That trend is also occurring across the country and is expected to impact affordability for years to come — and not for the better.

“Unless something is done urgently to increase supply, affordability will get a lot worse before it has any hope of getting better,” Bartlett and Bégin said.

Source

How foreign homeownership bans and major increases in immigration could impact the BC housing market.

Wed, 14 Jun 2023 20:24:59 GMT

If there’s one thing that every real estate agent, developer and homeseeker can agree on when it comes to the BC housing market, it’s that it’s always changing.

From government interventions to leaky condos to a pandemic push to the suburbs, history proves time and again that it’s impossible to predict what’s next on our collective real estate journey. But a new report from the BC Real Estate Association (BCREA) stresses that challenging times are ahead if the province can’t significantly boost supply in the coming years, as immigration-driven demand is set to peak. The report says that a sustained 25% boost in supply would alleviate the rise in prices set to come, let’s take a look at the report and help guide you through their findings.

Two for the show.

Over the next three years, there are two significant government policies that will affect housing demand in British Columbia more than any other. First on the list is the Foreign Buyers Ban, also known as the "No Home for You, Non-Canadians Act." It's like a vigilant bouncer at an exclusive nightclub, denying entry to non-Canadians seeking to snag residential properties. The goal? To cool down those sizzling home prices and prevent homes from turning into magical money-making machines.

The real showstopper is the government's increased immigration targets. We're talking about welcoming a staggering 1.5 million new permanent residents here in Canada by 2025. B.C. alone is expected to open its doors to an estimated 217,500 new permanent residents from 2023 to 2025, nearly double the historical average immigration levels. It's a massive influx of talent, diversity, and demand storming the housing market. Brace yourselves, folks—BC is about to get cozy.

Ban-couver.

While the Foreign Buyers Ban has been put in place to prevent foreign investors from buying up homes and using them as speculative financial assets, the BCREA believes there is weak evidence that the ban will achieve its objective of lowering home prices. On the other hand, the association says that increased immigration targets will have five times more impact on demand than the Foreign Buyers Ban, necessitating a 25 percent increase in new home completions to offset the deterioration in affordability. Don’t kid yourself - that would be a massive increase.

At the end of the day, the impact of the increase in immigration targets is much more significant than the decline in sales due to the prohibition on foreign buyers. The increased national target for immigration will translate to approximately 20,500 new BC households over and above average annual immigration. This means that there will be a 20,500-unit increase in demand for either ownership or rental housing just from permanent residents. Given the challenging affordability of many cities in BC, only a portion of the new households formed as a result of increased immigration will become homeowners.

Balancing act.

To alleviate the strain on the housing market caused by sudden changes in demand, the government can take steps to increase the supply of housing. Some of these steps may involve modifying zoning regulations to permit more construction, allocating more funds to affordable housing initiatives, and offering incentives to developers to construct additional housing units. If they’re committed to increasing supply, they need to act quickly - which is a word that, historically, most legislators around the country are unfamiliar with.

The BCREA found that to keep up with the increase in immigration, new home construction in BC must increase by 25 percent over the next five years, reaching a record level of about 43,000 completions annually. Although that pace of completion is similar to what was achieved in 2020 and 2021, higher interest rates and weaker market conditions make that rate of completion much more difficult to hit. Additionally, the ban on foreign buyers has made it more challenging to finance new home construction without access to international capital markets.

Slow your roll.

Lowering price growth so that income growth can catch up to prices is integral to improving housing affordability in BC, and an appropriate supply response could offset the impact on affordability. On a longer time horizon, it can also help to make progress in permanently improving affordability.

Instead of policies designed to limit demand through taxation or prohibition, the BCREA’s findings suggest that governments should pursue an abundance agenda for housing. An agenda that includes more housing, fewer obstacles to building more housing, and a streamlined process to get more housing to the market faster. Without such an agenda, it will only be a matter of time before the market is again facing accelerated price growth and deteriorating affordability as demand soars and supply struggles to keep pace.

Planning for success.

If you were having a dinner party and you only had eight seats at your table, you wouldn’t invite 12 friends over without bringing up your trusty folding table and chairs from the crawl space. Otherwise, your friends Barry, Ellen, Rocco and Sophia are going to end up eating Pasta Primavera on your brand-new Chesterfield, and we all know Rocco can’t be trusted not to make a mess. Especially with chocolate lava cake coming for dessert. It costs not to plan ahead.

While immigration plays a vital role in the economy by supporting economic growth, creating job opportunities, and bringing diversity to communities, it also adds significantly to housing demand. As the population continues to grow and global migration patterns persist, it is essential to understand and embrace the positive impacts of immigrants in the broader economy while also planning for the impact on housing.

Let’s get the table and chairs from the basement. The challenge lies in creating policies and programs that support and welcome immigrants while addressing the consequent pressures on an already stressed housing market. 43,000 new completions annually sounds like a good start.

Source

Housing Trends In Burnaby Have Changed Since 1996

Wed, 31 May 2023 05:59:04 GMT

This week, the City of Burnaby launched the “visioning” phase of its new Official Community Plan (OCP), which will guide the long-term vision for Burnaby’s transportation, infrastructure, parks, agriculture, arts, and housing all the way through 2050.

Under British Columbia’s Local Government Act, municipalities in BC are required to have an OCP. Burnaby’s current Official Community Plan was adopted in 1998 and revised in 2014, but the City says that a new updated plan is needed in order to “respond to the current an emerging needs of the community” and “articulate how growth will be shaped and managed.”

One of the biggest topics in Burnaby is housing and urban development, and to surmise what the future of housing in Burnaby will look like, it helps to first understand the past and present.

According to insights compiled by the City, there have been some subtle, but not insignificant, changes when it comes to housing trends in Burnaby.

The biggest shift has arguably been in terms of the kinds of housing found in Burnaby. In 1996, about 42% of all housing in Burnaby were single-family or two-family homes — the most common of all housing types. As of 2021, that number has nearly halved to 22%. Homes in low-rise buildings have also decreased during the same period, but only slightly, from about 28% to 25%.

Meanwhile, all remaining types of housing have increased. Row houses have increased slightly from about 7% to 9%, duplexes have more than doubled from about 7% to 16%, and homes in high-rises have increased from 18% to 29% — the highest of all types of housing, as of 2021.

This data is dated to 2021 but will more than likely continue on this trajectory in the near future, as most of the residential development that’s occurring in Burnaby is taking the form of multi-family buildings, many of which are in high-rises.

Just in the past few months, Burnaby has seen two new master plan proposals in Burnaby Lake Heights and Burnaby Lake Village, which would consist of 12 and 14 buildings, respectively. Both of those are located in the Bainbridge area of Burnaby, but other master plan communities are also taking form in Edmonds and Brentwood, all of which include plans for high-rises.

According to the City, the Metrotown and Brentwood areas have seen the largest increases in housing units by far, and there still remains plenty of projects on the way in those areas, many of which are high-rises.

In terms of the people, Burnaby has seen a shift between homeowners and renters that’s fairly rare not only in British Columbia, but all of Canada. While Canada’s renter population is growing at twice the rate of homeowners, according to Statistics Canada, Burnaby has seen the opposite. In 1996, 45% of households rented compared to 55% of households who owned their homes, but those numbers are 38% and 62% as of 2021.

According to the City, Burnaby had an inventory of 13,850 purpose-built rental units. By 2021, that number had decreased to 11,539. Burnaby has had a reputation for demolishing old rental buildings to make way for newer buildings, many of which were for-sale condominiums rather than apartments for rent.

The average household size in Burnaby has also decreased slightly, from 2.6 people in 1996 to 2.4 people in 2021. That change is attributed to a nearly 5% decrease in households with four or more people, from about 26% to 21%. In that same span, households with one person, two people, or three people all increased by about 1% to 3%.

The total number of homes in Burnaby was 68,750 in 1996 and 101,136 as of 2021, and the City is expecting to hit over 150,000 by 2050.

The development of the Burnaby 2050 Official Community Plan is expected to take multiple years and be completed by Summer 2025. In June, the City will be hosting numerous free events where residents are welcome to learn about and contribute to the development of the plan.

Source

Real estate investment remains strong in Metro Vancouver despite inflation, cost of living: report.

Wed, 31 May 2023 05:04:19 GMT

Despite the pressures of inflation and cost of living, more than half of Metro Vancouver real estate investors say they plan to buy another property in the region, according to a survey for a real estate firm.

The Royal LePage survey, conducted by Leger, found 54 per cent of respondents in Greater Vancouver say they intend to purchase an additional residential investment property within the next five years. Of those, just over half will buy a condo.

In Metro Vancouver, 67 per cent of respondents own one residential investment property, while 29 per cent own two or more, according to the survey.

“The appetite for real estate investment is strong in the Greater Vancouver area. Unlike stocks or other investment types, real estate investing offers the convenience of dual utility — you can live in your home or rent it out as a source of income,” said Adil Dinani, a spokesperson for Royal LePage West Real Estate Services, said in a statement.

“There is a positive association between home ownership and the creation of personal wealth in Vancouver.”

Out of the three major urban centres in Canada, a property’s proximity to a post-secondary institution had the greatest influence on Greater Vancouver investors, at 53 per cent, according to the survey.

While higher borrowing and cost of living pressures have caused some Vancouver investors to rein in spending, many have been able to withstand increased expenses, said Dinani.

“In today’s post-pandemic era, despite higher borrowing costs, I expect more people will enter the investor segment as rates hold and eventually ease. Buyers will be looking for opportunities in the market,” said Dinani.

According to the survey, 28 per cent of investors in Greater Vancouver say that increased interest rates have caused them to consider selling one or more of their investment properties. When asked about their plans for the future, 28 per cent of investors in the region say they are likely to sell one or more of their investment properties within the next two years.

Leger says the online survey of 1,003 adult Canadians, who own one or more residential investment properties, was completed between March 2 and March 17 using Leger’s online panel. The company says no margin of error can be associated with a non-probability sample from a web panel.

The Leger poll comes as another survey Thursday by Co-operators, a Canadian financial services provider, found only 31 per cent of British Columbians aged 18 to 44 are confident in their ability to choose investment opportunities that will make money. In that survey, 40 per cent say that recent stock market fluctuations have made them hesitant to invest.

Earlier this week, Statistics Canada reported that investors made up almost 10 per cent of homeowners in B.C. in 2020.

The figures show B.C.’s share of investor-occupants, who own a single property with several units, including their primary residence, sat at 9.6 per cent that year, much higher than in other provinces.

For example, investor-occupants made up 2.5 per cent of New Brunswick’s homeowners, 1.8 per cent in Nova Scotia, 0.8 per cent in Ontario and 0.7 per cent in Manitoba, while other provinces weren’t part of the study.

StatCan attributed the high numbers of investor-occupants in B.C. to incremental forms of density, such as single-detached houses with secondary suites or laneway units, duplexes or triplexes.

Source

Metro Vancouver calls for developers to pay even more

Tue, 02 May 2023 05:37:40 GMT

Metro Vancouver’s board of directors has approved a motion to re-work its budget to ease the rising tax burden for the region’s 2.8 million residents – and saddle real estate developers with much higher costs.

The motion, approved April 19, gives staff a mandate to overhaul its 2024 budget and move toward a plan that would lower Metro fees for single households by more than 16 percent between 2022 and 2026. The plan, however, would also increase development cost charges levied to developers when they build new residential or commercial projects.

Development cost charges (DCCs) are collected from developers and applied to the cost of infrastructure related to growth. DCCs are charged either on a per-square-foot basis or, in residential, as a flat fee per housing unit.

On April 28, the Metro board will decide whether developers, including those building new homes, will cover almost 100 per cent of the ballooning cost of water and sewage, the most expensive infrastructure, as part of Metro's 2024-2028 Financial Plan.

Currently there is an 82.5 per cent development fee on sewage infrastructure costs and Metro's new water infrastructure fee will be 50 per cent of related costs.

The change means ”that 99 per cent of the cost of system expansion is covered by development cost charges rather than water sales to water district members or liquid waste services levies to sewerage and drainage district members,” explained Jennifer Saltman, a communication specialist with Metro Vancouver.

The Metro Vancouver DCC rates would be on top of any municipal charges for new real estate developments.

DCC rates already rising

But development cost charges are already increasing, even nearly doubling this year from a year earlier.

Richmond city council, for example, has raised its DCC rates for a new detached house from $41,885 per lot to $61,138, a 47 per cent increase. The per-square-foot development cost charge on a townhouse is up 42 per cent from a year ago, while DCCs on a new condo apartment rose 43 per cent. The higher rates would add from $32,000 to $34,000 to the end price of a 1,000-square-foot strata unit.

Commercial DCC rates are up as much as 51 per cent. The biggest hike is in major new industrial projects in Richmond, where the DCC per acre has increased 99 per cent to more than $206,000.

Richmond has approved all the increases and needs only provincial approval to bring them online.

Dana Westermark, a Richmond developer, called these DCCs “punishing,” saying they will ultimately be passed on to buyers.

“It affects the end price of all housing,” he told Glacier Media. “(It’s) delusional thinking that, somehow, development will absorb the cost and it won’t get passed on.”

Richmond is not alone in jacking up DCC rates, even as the province is encouraging municipalities to reduce barriers to new residential development.

Some municipalities have not updated their fees in years and the new rates can be steep.

After a 33 per cent increase in 2022, compared to 2018, Coquitlam now charges $60,422 in DCCs for a new detached house, $39,664 per unit for a duplex or fourplex; $35,807 for each new townhouse; and $22,694 for every new apartment. New commercial rates run from $58 to $101 per square metre (approximately $5.50 to $10 per square foot.)

The City of Vancouver adjusted its DCC rates last September 30, as it does each year. For a high-density residential project, the DCC rate is $343 per square metre, or about $32,000 for every 1,000 square feet of new housing.

Vancouver’s DCCs for new commercial projects is $24.68 per square foot, with light industrial projects paying $18.51 per square foot, both higher than the annual average per-square-foot lease costs achieved by developers.

Vancouver residential DCC rates are low compared to some suburban markets, but the city also levies community amenity contributions (CACs) that add thousands of dollars to the developer’s cost. CACs, which can be a cash payment or the donation of park space, child-care spaces or other amenities, are also now being charged by some suburban municipalities.

In Port Moody, where DCC rates are from $13 to $14 per square foot for new strata units, Edgar Developments recently paid $30 million for a new road, $2.8 million for public art works and donated 5.1 acres to BC Housing to gain approval for a 2,000-home master-planned development, the first, and largest, in the city in 20 years.

Metro Vancouver’s fee increases come amid rising inflation, ongoing debt obligations and billions of dollars in infrastructure planning across a region housing nearly half of B.C.’s population.

Metro is currently building or upgrading three wastewater treatment plants. The largest of those is the Iona Island Wastewater Treatment Plant, a $10.4 billion, 10-year project designed to meet new regulatory requirements and the needs of a growing population.

Other major capital projects include a massive upgrade to the regional body’s more than 500 kilometres of water mains — a series of projects meant to keep up with population growth and to have a better chance of providing reliable drinking water in the event of a serious earthquake or severe weather event.

Laudable spending. The question now is who should pay for it all.

Source

Canadian Housing Agency Predicts Home-Price Drop Will End This Year

Tue, 02 May 2023 05:30:39 GMT

(Bloomberg) — The rapid decline in Canadian home values will come to an end in 2023 as a lack of supply reasserts upward pressure on prices, the country’s housing agency said in its annual forecast.

Prices will start to rise by next year as the pace of new home building fails to keep up with high levels of immigration and a quickening economy, Canada Mortgage & Housing Corp. said in its report. There’s already some evidence a recovery in home prices is underway: In March, the national benchmark rose for the first time in a year.

Canadian home prices posted their worst annual drop on record last year as the Bank of Canada enacted an aggressive campaign of interest rate hikes to combat inflation. The central bank paused those efforts in March and the housing market has begun to show signs of life, but buyers are confronting a marked lack of homes for sale.

The country’s housing agency predicts the annual average price will end 2023 below last year’s levels, but focused its report on the risk of housing becoming increasingly unaffordable for too many Canadians with the prospect of further price declines and a steep recession receding.

“Affordability will continue to deteriorate through 2023, in both the ownership and rental markets,” Bob Dugan, CMHC’s chief economist, said in a press release. “With demand for housing still well outpacing new housing supply, affordability challenges will persist for owners and renters.”

The agency forecasts Canada’s average annual home price will end 2023 at C$643,325 ($472,581) from C$703,875 last year as the economy risks a “mild recession” as a result of the central bank’s interest rate hikes. However, that will also prompt a sharp drop in the pace of new home construction, exacerbating existing housing shortages in cities like Vancouver and Toronto and contributing to a rebound in prices the following two years, the agency said.

In Toronto and Vancouver, there are already signs of sales and prices picking up. Those cities may be leading a recovery process, which should see prices bottom nationally between April and June, before beginning to rise again in the second part of the year, Dugan said on a conference call with reporters.

Source

Government of Canada Introduces Amendments to Foreign Buyer Ban

Tue, 28 Mar 2023 17:36:43 GMT

On Monday, the Government of Canada announced a series of amendments to the foreign buyer ban — officially called the Prohibition on the Purchase of Residential Property by Non-Canadians Act — to expand the exceptions to the regulations, some of which have become an unintended thorn in the sides of developers across the country.

The four amendments to the foreign buyer ban are effective immediately, as of March 27, 2023, and are as follows.

The Foreign Control Threshold is Now 10%

While the foreign buyer ban was originally created with individual Canadians and the resale market in mind, a less-discussed aspect of the ban was its effect on the development industry, particularly with the legislation deeming an entity as foreign if non-Canadians owned 3% or more of it.

In the short months since the ban came into effect on January 1, this 3% has been repeatedly cited by developers as overly-restrictive, specifically for real estate investment trusts (REITs). With the amendment, the maximum amount of non-Canadian control in a REIT subject to the foreign buyer ban is now 10%.

Purchasing for the Purpose of Development

Perhaps even more of a relief is the new exception that allows non-Canadians to purchase residential property, if the purpose is development. Previously, this exception was only applicable to publicly-traded corporations.

According to a CMHC FAQ, “development” does not include “the mere purpose of leasing or renting the property out to tenants or otherwise managing it as a rental property as part of its portfolio.” Repairs, renovations, and remodeling also do not count as “development,” but the CMHC notes that some expansions or remodels that are “tantamount to the construction of a new building or a change of use” — such as one that would create a new residential property — do, and will now be allowed.

The Ban No Longer Applies to Vacant Land

Under the previous regulations, vacant land zoned for residential use or mixed-use with residential could not be purchased by non-Canadians.

The Government of Canada is now repealing that restriction — Section 3(2) — and with the change, non-Canadians can now purchase vacant land zoned for residential use and use it for any purpose.

The Ban No Longer Applies to Work Permit Holders

A common criticism of the foreign buyer ban has been that it seemingly contradicts the federal government’s lofty immigration goals, or even gives the appearance of xenophobia, by limiting the ability of those who may be looking to settle down in Canada from buying homes.

Now, those who hold a work permit or are authorized to work in Canada are allowed to purchase residential property, so long as they have 183 days of validity, or more, remaining on their permit, and have not purchased more than one residential property.

Source

CIBC's Tal on foreign buyer ban: "The damage is real"

Wed, 01 Mar 2023 05:16:37 GMT

Unintended consequences of the “Prohibition on the Purchase of Residential Property by Non-Canadians Act” would require amendments to the clause banning foreign homebuyers from participating in the housing market, according to Benjamin Tal of CIBC Capital Markets.

The legislation, which came into effect on January 1, applied restrictions on any direct or indirect purchase of residential property by non-Canadians for a two-year period.

“The motivation of course is to improve affordability by eliminating a source of housing demand that is often less price sensitive than local buyers,” Tal said.

Tal acknowledged the argument that foreign buyers are a negligible factor at best, noting that non-Canadians own a minimal share of the housing stock in the hottest markets (at 2.2% in Ontario and at 3.1% in British Columbia).

“But the counterargument is that whatever marginal role foreign buyers play, eliminating its impact on home prices is better than nothing,” Tal said. “There is nothing to lose. And that’s where the issue is. In fact, there is plenty to lose.”

While the language surrounding the legislation is “straightforward”, there might be some disagreements with the terms “residential property” (which also includes “any developed or vacant land that does not contain any habitable dwelling and that is zoned for residential or mixed use and also is located within a census metropolitan area”) and “non-Canadian” (which the Act defines as any entity with 3% or more foreign ownership, wording that inadvertently includes most publicly traded Canadian REITs, Tal said).

“Consider the language around the term ‘purchases’,” Tal added. “It refers to a direct or indirect purchase, which means that any acquisition of a lease or a mortgage tied to a residential property by a non-Canadian is prohibited.”

The immediate consequences have been an unwelcome surprise for the industry, Tal said.

“The damage is real,” Tal said. “Many commercial real estate deals have been cancelled or are on hold despite the fact that they have nothing to do with residential housing. Developers that are partly foreign-owned or rely on foreign equity cannot proceed with purpose-built developments that, in our view, are the most effective tool to tackle Canada’s housing affordability crisis.”

Policymakers should immediately take stock of the situation and buttress the market against further undesirable consequences by “[amending] the Act in a way that is consistent with what it was intended to achieve — focusing only on single units being purchased by foreigners while exempting development of new supply from the impact of the new legislation,” Tal said.

Source

Canada's annual inflation rate slowed in January, serving good news for the BoC

Tue, 28 Feb 2023 08:25:41 GMT

OTTAWA - The annual inflation rate slowed more than expected in January, suggesting the Bank of Canada is likely content with its decision to pause rate hikes as price pressures continue to ease.

In its consumer price index report released Tuesday, Statistics Canada said the deceleration in headline inflation to 5.9 per cent in January from 6.3 per cent in December reflects a base-year effect.

A base-year effect refers to the impact of price movements from a year ago on the calculation of the year-over-year inflation rate.

Given much of the acceleration in price growth happened in the first half of 2022 as the threat of Russia invading Ukraine turned into a reality, the federal agency said the annual inflation rate will continue to slow in the coming months.

The last time Canada's annual inflation rate was below six per cent was in February 2022 when it was 5.7 per cent.

The headline rate came in lower in January than many commercial banks were anticipating in their forecasts, signalling good news for the Bank of Canada.

Last month, the Bank of Canada hiked its key interest rate for the eighth consecutive time since March 2022, bringing it from near zero to 4.5 per cent. That's the highest it's been since 2007. At the time, the central bank said it would take a “conditional” pause to assess the effects of higher interest rates on the economy.

In an interview, BMO chief economist Douglas Porter said the positive surprise in Tuesday's report was “very welcome,” but noted some of the decline in headline inflation had to do with one-off events. For example, prices for cellular services were down because of extended Boxing Day sales.

“On balance, this slightly takes the pressure off of the Bank of Canada,” Porter said, adding that another hike at the central bank's next rate decision on March 8 is most likely off the table.

On a monthly basis, higher gasoline prices in January drove the overall price level higher compared with December. The federal agency said the consumer price index rose 0.5 per cent in January after declining by 0.6 per cent a month prior.

According to its most updated forecast, the Bank of Canada anticipates the annual inflation rate to fall to about three per cent by mid-year. A return to its two per cent target is expected in 2024.

So long as the economy and inflation evolve in line with the Bank of Canada's forecasts, the central bank estimates it won't need to raise rates further.

Though Canadians will start seeing the headline rate fall more noticeably in the coming months - barring unexpected global events - economists have noticed price pressures easing for months now.

According to BMO, the three-month annualized inflation rate is hovering at about 2.4 per cent, suggesting inflation is headed toward target.

But from an affordability standpoint, RBC economist Claire Fan said “the pain is still there,” given higher prices are already baked into the economy.

“It's really hard to wrap our heads around the idea that lower inflation doesn't equal outright deflation,” Fan said.

Though headline inflation is inching closer to target, Canadians saw no slowdown in the cost of groceries last month as prices rose faster on a year-over-year basis.

Grocery prices were up 11.4 per cent compared with a year ago, marking an acceleration from 11 per cent in December. The federal agency said prices for meat, bakery goods, and vegetables all rose faster.

Porter said the food inflation was the “one piece of bad news” in the January inflation report.

The chief economist stressed that soaring grocery prices is a global phenomenon, noting it is “not a Canadian story alone.”

Some factors playing into this, he said, include avian flu affecting poultry products and the war in Ukraine affecting vegetable oil and grain prices.

Fan said although Canadians have yet to see grocery prices ease, lower commodity prices will eventually feed through the supply chain to retail prices.

“It's just taken a bit longer than many had expected.”

This report by The Canadian Press was first published Feb. 21, 2023.

Source

What the Bank of Canada’s recent rate hike means for mortgage holders

Fri, 27 Jan 2023 06:20:22 GMT

TORONTO — Canadians, who have watched the cost of a mortgage rising steadily over the past year, took another hit when the Bank of Canada hiked its interest rate to 4.5 percent on Wednesday.

The hike is the eighth in less than a year and was accompanied by the central bank, which said the rate is likely to remain at 4.5 percent unless Canada’s stubbornly high inflation rate falls short of its 2 percent target.

The rise in interest rates is bound to weigh on prospective homeowners and mortgage holders as mortgage rates tend to move in tandem with changes in interest rates.

Here’s a look at what Wednesday’s announcements will mean for the mortgage sector.

What does this announcement mean for people with mortgages?

An interest rate hike like this one will typically bring about a lot of stress, said Leah Zlatkin, a mortgage broker with LowestRates.ca,

Homeowners with variable rate mortgages, which fluctuate, have seen their rates increase substantially from last year.

Many have already seen their amortization extend as rates have gone up because while their payments have remained steady, they have paid down less principal.

The danger becomes when these people hit their trigger point — when monthly mortgage payments are no longer sufficient.

At that point, your bank will call and adjust your payments, she said.

How much can the average variable mortgage holder expect their mortgage to rise by as a result of these changes?

For every $100,000 of a mortgage with a variable rate, homeowners should expect to pay $20 more per month, LowestRates.ca said.

The company completed several calculations assuming someone had a 15 per cent down payment under $1 million and a 25-year amortization period.

Based on the Canadian Real Estate Association saying the average Canadian home sold for $626,318 last month, a variable rate of 5.25 per cent will mean monthly mortgage payments will total $3,261. At 5.5 per cent, monthly mortgage payments become about $3,341, an increase of $80 per month.

In Toronto, where the Toronto Regional Real Estate Board found the average home sold for more than $1.1 million in December, a variable rate of 5.25 per cent equates to monthly mortgage payments of $5,251. At 5.5 per cent, monthly mortgage payments become roughly $5,378, an increase of $127 per month.

In Vancouver, where the Real Estate Board of Greater Vancouver said the benchmark home price was $1,114,300 last month, a variable rate of 5.25 per cent brings monthly mortgage payments to $5,312. At 5.5 per cent, monthly mortgage payments reach about $5,441, an increase of $129 per month.

If my mortgage is about to be up for renewal, what should I expect?

"There's going to be a situation where a lot of people may be experiencing shock when they renew their mortgage," said Zlatkin.

Because rates have increased so substantially since they signed their current mortgage, they will now see that they likely have to qualify at a much higher rate than before.

Zlatkin recommended that people who foresee themselves in this situation start budgeting now.

"If you think that you're going to renew when you realize that the payment amounts are going to be excessive and you're not going to be able to afford it, you may need to look into refinancing," she said.

That can mean amortizing your mortgage over a longer period of time, but not changing the amount you will pay, but she recommends discussing any potential change with your broker sooner rather than later.

"You don't want to go into a default situation, so you want to be very proactive," she said.

Should I switch between a variable rate and fixed rate mortgage?

"In a rising rate environment, many people are often opting away from variable rate mortgages," said Zlatkin.

However, she thinks making such a switch no longer makes sense for most people because rates have risen so sharply.

When interest rates were around two per cent last year, it was "super cheap" to break a variable rate mortgage. Now that rates have increased so substantially, it's going to cost between one and one and a half per cent to break out of a variable rate mortgage.

"It might just be the wrong time," Zlatkin said.

"Everybody's circumstances are unique, but in 80 per cent of cases you've missed the boat."

Source

New year, new rules: Home buyer rescission period and foreign buyer ban

Mon, 23 Jan 2023 19:50:00 GMT

New federal and provincial legislation wnet into effect on January 1 that affect how REALTORS® conduct their business, and who they can conduct business with.

Here’s a quick summary of what you need to know

The BC Real Estate Association’s (BCREA’s) Standard Forms is updating and revising several existing forms to prepare for the January 1 implementation of the Home Buyer Recission Period (HBRP) in BC. There’ll also be one new form, the Notice of Rescission – Residential Real Property.

The new form, and all the revised ones, will be available on BCREA Standard Forms on January 1. They’ll be accompanied by usage guides and other practical information.

Two new regulations affecting BC’s real estate market went into effect with the start of the new year earlier this week. Here’s the key information you need to know

BC home buyer rescission period

As of January 1, 2023, BC home buyers now have a three-day period in which they can decide to back out of a purchase after signing a contract. If they do, the seller is entitled to 0.25 per cent of the agreed upon sale price of the home as a rescission or “break” fee.

There’s one new form, the Notice of Rescission – Residential Real Property, you'll need to use moving forward. Several other forms, including the Contract of Purchase and Sale (CPS), have been updated and all are available on WEBForms.

Federal foreign buyer ban

The Prohibition on the Purchase of Residential Property by Non-Canadians Act, which prevents non-Canadians from buying residential property in Canada for two years, went into effect January 1.

The federal government recently released the regulations supporting the federal foreign buyer ban, defining what the ban will look like. The Canadian Real Estate Association (CREA) created the Certification and Consent of Purchaser form for you to complete before assisting or advising a potential buyer and use in combination with other due diligence practices. CREA is working to get the form on WEBForms, but you can use the form linked above until it’s there.

source:rebgv.org

Here’s how cities in Canada rank in housing affordability & supply

Wed, 18 Jan 2023 19:28:36 GMT

A new ranking is out, analyzing how cities in Canada compare when it comes to housing affordability and supply after they undergo processes, approvals, and charges.

The Canadian Home Builders’ Association has released its 2022 Municipal Benchmarking Study and it examined 21 Canadian municipalities through three categories

Municipal planning approval processes, municipal charges imposed on new development, and municipal approval timelines were reviewed to see whether they help or hurt the development of new home construction.

“This report is intended to support the important conversation with all levels of government, but particularly with municipal governments, on the efficient delivery of much-needed new housing supply, including the impact that inefficiencies and taxes have on housing affordability, which is already a major challenge across the country,” said CHBA CEO Kevin Lee.

After finalizing the results, Edmonton, Charlottetown, and Calgary topped the list, in that respective order, with high scores in two of the three categories reviewed.

At the bottom of the barrel, you’ll find Toronto in 18th, Pickering in 19th, Bradford West in 20th, and Markham dead last in 21st place.

“The study shows significant variations in the approval timelines of municipalities, ranging from 3 months (Charlottetown) to 32 months (Toronto),” states the report. And according to the press release, CHBA’s 2020 Municipal Benchmarking Study compared to 2022 saw municipalities in Ontario have their timelines worsen, while others outside Ontario saw average timelines improve.

The average cost of government charges imposed by municipal governments on low-rise new housing development averages almost $62,000 per unit. Toronto saw charges over $189,000 per unit. And when it comes to high-rise new housing development averages were over $41,000 per unit while Vancouver saw average charges of over $125,000 per unit.

Overall, Canadians understand how expensive it can be to purchase a home, let alone how much they need to make in order to get approved for a mortgage. There’s no surprise here how financially difficult it can be to purchase a home in big cities like Toronto and Vancouver where municipal charges are the highest.

Maybe it’s time to look at cities that offer the best quality of life AND are much more affordable.

source: curiocity.com

The Year of the Buyer: Canada's Luxury Real Estate Market Shifts in Favour of Buyers as Opportunities Emerge Post-Pandemic

Wed, 18 Jan 2023 19:20:20 GMT

TORONTO, Jan. 18, 2023 (GLOBE NEWSWIRE) — Following an era of exorbitant hyperinflation in Canadian luxury real estate, new post-pandemic benchmarks were established in 2022 as the housing market responded to a cascade of stressors. Against a backdrop of mounting economic uncertainty, steep interest rate hikes, escalating inflation, a stubborn deficit of housing inventory and sweeping housing taxation and regulatory changes, prospective luxury real estate sellers and buyers withdrew strategically from the market in anticipation of greater opportunity in 2023. By the end of 2022, the country’s major metropolitan areas emerged from a historic chapter of hyperinflation into a new era where consumer demand for housing and housing mobility remained unrelenting, just as market conditions verged on favouring buyers.

According to new data released by Sotheby’s International Realty Canada, luxury sales activity in the Greater Toronto Area (Durham, Halton, Peel, Toronto and York) receded through the course of 2022, as listings supply faded, and buyers temporarily retreated. Residential real estate sales over $4 million (condominiums, attached and single family homes) fell 24% year-over-year, while ultra-luxury sales over $10 million on Multiple Listing Service (MLS) declined 29% from 2021 levels. Sales of condominiums, attached and single family homes over $4 million fell 29%, 25% and 23% year-over-year, respectively. Overall, $1 million-plus residential sales saw an annual decline of 28%, despite underlying demand for top-tier housing and housing mobility.

Vancouver’s luxury real estate market experienced a sharp decline in sales activity following the first quarter of the year as prospective buyers, frustrated by an era of heated market conditions, paused in anticipation of more favourable opportunities ahead. Overall, residential sales over $4 million and $10 million closed at volumes 30% and 46% below 2021 levels. Luxury condominium sales over $4 million remained stable with a nominal 3% year-over-year uptick, while attached home sales declined 73%. The city’s $4 million-plus single family home saw sales decrease 32% year-over-year, while ultra-luxury single family home sales over $10 million fell 46%. Overall, residential real estate sales over $1 million were down 29% in 2022 from the city’s record sales volume in 2021.

Montreal’s luxury real estate market tempered to more balanced conditions over the course of 2022. The city closed the year with $4 million-plus residential real estate sales nearly on par with 2021 levels, with a modest 2% year-over-year uptick, while sales activity over $1 million experienced an 18% annual decline. Overall, $1 million-plus single family home sales were down 22% year-over-year, while attached home and condominium sales over $1 million fell 23% and 5%, respectively.

Calgary’s luxury real estate market out-performed that of Canada’s largest major metropolitan areas, as the city’s strengthening economic fundamentals ignited consumer confidence and civic optimism and as interprovincial-migration lifted demand for the city’s conventional and top-tier housing. As a result, the city’s top-tier market rebounded in 2022, and sales over $1 million rose 16% year-over-year from 2021 levels. Sales over $4 million increased 50% to six properties sold. $1 million-plus single family and attached homes sales saw 12% and 68% annual sales gains, respectively, while condominium sales over $1 million experienced a significant 79% year-over-year increase.

“After an era of intense hyperinflation, new post-pandemic benchmarks for Canadian conventional and luxury real estate were established in 2022 as the market processed the impact of aggressive interest rate hikes and the effects of an increasingly uncertain global and domestic economic climate. By the end of the year, luxury housing segments in several major metropolitan areas were on the brink of buyers’ market conditions, while others had very clearly shifted into this territory,” says Don Kottick, President and CEO of Sotheby’s International Realty Canada. “The market is now on the verge of another important adjustment, this time in terms of pricing. It has taken several months for home sellers to realize the impact of the changing market on the market values of their properties. As new property listings come onto the market in 2023, their pricing will shift to meet current realities. This will start to unlock long-awaited opportunities for buyers and upsizers to purchase homes that meet their lifestyle needs as they acclimatize to the market.”

According to Kottick, a fundamental deficit of housing across every property type and price category will continue to challenge major metropolitan housing markets, and in particular, Vancouver and Toronto. Although housing prices are expected to adjust downward to realistic market norms in several major metropolitan areas, pent-up demand for housing mobility as well as anticipated population gains from immigration will continue to support housing values in the long term. The “Prohibition on the purchase of residential property by non-Canadians Act” (the “Foreign Buyers Ban”) that came into force January 1, 2023, as well as demand-side policies and taxes will have a negligible effect on affordability, according to Kottick, and have largely served to confuse and frustrate prospective new Canadians at a time when the country is aiming to attract skills, talent and capital.

2022 Top-Tier Market Highlights

Vancouver

Following a frenzied launch into 2022 that propelled luxury real estate sales and prices to record highs through the first quarter of the year, the City of Vancouver abruptly shifted course, adjusting towards a new post-pandemic reality as sales activity and prices calmed in response to climbing mortgage rates and consumer inflation. Despite pent-up consumer demand and widespread need for housing mobility, the city’s luxury market settled to balanced conditions by year’s end as potential transactions were thwarted by sellers with pricing expectations that no longer aligned with market realities, and as buyers prepared to wait for fresh supply at adjusted prices to be introduced in the months ahead.

As home sellers’ and buyers’ willingness to engage in the market faltered in face of swiftly changing conditions, the city’s already scant inventory of luxury real estate evaporated, and with it, sales activity. Overall, luxury residential real estate sales over $4 million (condominiums, attached and single family homes) declined 30% year-over-year to 299 properties sold in 2022, with 13 of these sold above $10 million on Multiple Listing Services (MLS), down 46% annually. Overall, residential real estate sales over $1 million fell 29% to 4,166 properties sold in 2022.

$4 million-plus sales activity in the last half of 2022 reflected the market’s sharp adjustment to multiple interest rate hikes and the flight of real estate buyers and sellers to the sidelines as a result. Despite strong underlying demand, evaporating luxury supply and increasing market uncertainty resulted in a dramatic moderation of the luxury market. Between July 1 – December 31, 2022, residential sales over $4 million decreased 50% to 88 properties sold, while $10 million-plus sales on MLS fell to five properties sold compared to eight sold in the last half of 2021. Overall, $1 million-plus sales were down 48% to 1,346 properties sold in the latter half of 2022.

Post-pandemic, the City of Vancouver had experienced its initial luxury housing rebound in its single family home segment, resulting in historic highs in sales activity and pricing that peaked in the first quarter of 2022. Through the remainder of the year however, the city’s luxury single family home market normalized. Overall, in 2022, single family home sales over $4 million receded 32% year-over-year to 257 properties sold, while ultra-luxury sales over $10 million fell 46% to 13 sold in 2022. $1 million-plus single family home sales were down 41% year-over-year to 1,744 homes sold.

In the latter half of 2022, luxury single family home sales reflected the market’s rapid shift towards balanced conditions. $4 million-plus home sales fell 51% to 75 homes sold between July 1– December 31, while ultra-luxury home sales over $10 million declined to five homes sold compared to eight sold in the latter half of 2021. Overall, sales over $1 million were down 51% year-over-year to 597 homes sold in the last half of 2022.

The city’s chronically under-supplied luxury attached home market also normalized through the course of 2022, as sales over $4 million declined to three homes sold compared to 11 sold in 2021. As in 2021, there were no ultra-luxury attached home sales over $10 million reported in 2022. Overall, 915 attached homes sold over $1 million in 2022, down 30% year-over-year overall. Luxury attached home sales were quiet in the last half of 2022, reflecting the market’s dramatic normalization. There were no sales recorded above $4 million between July 1 – December 31, compared to three sold in the last half of 2021. Overall, $1 million-plus attached home sales were down 47% year-over-year during this period with 305 homes sold.

Despite strong demand and activity in Vancouver’s luxury condominium market in the first half of 2022, the market calmed in the latter half of 2022, as prospective buyers and investors withdrew from the market in anticipation of continued market moderation. Luxury condominium sales over $4 million were stable, with a nominal 3% year-over-year increase to 39 units sold in 2022, while the ultra-luxury market above $10 million remained quiet, as was the case in 2021. $1 million-plus condominium sales saw an 8% annual decline to 1,507 units sold in 2022.

Luxury condominium sales in the latter half of 2022 reflected the striking pace of moderation experienced across the market. From July 1– December 31, sales of condominiums over $4 million contracted 32% year-over-year to 13 units sold, while $1 million-plus sales fell 43% to 444 properties sold.

Although the city’s luxury sales activity was subdued in 2022, the undercurrent of demand for Vancouver luxury real estate remains strong, and the city is on the brink of renewed activity in 2023. According to Sotheby’s International Realty Canada experts, the catalysts for the reactivation of the luxury market will be the introduction of fresh property listings selection for prospective buyers and investors in the coming months, as well as widely anticipated price moderation for those listings to meet current market conditions. Both factors are expected to facilitate consumer re-engagement in the 2023 top-tier market.

Calgary

The City of Calgary cemented itself as one of the country’s leading economic and luxury real estate performers in 2022, surpassing other major metropolitan areas in top-tier sales activity and consumer confidence. Commodity price-driven momentum, as well as the city’s flourishing and rapidly diversifying economy bolstered the readiness of luxury home buyers, sellers and investors to transact despite the headwinds of inflation and rising interest rates. Furthermore, Calgary attracted in-migration from other major Canadian regions, most notably Ontario, as young professionals and families seeking a lower cost of living, better quality of life, and attainable conventional and luxury homes flocked to the city.

As a result, Calgary transformed into a healthy and active sellers’ market through the course of 2022, with residential sales over $1 million seeing substantial gains throughout the year, even as days on market fell. Overall, $1 million-plus sales (condominiums, attached and single family homes) increased 16% year-over-year to 1,280 properties sold. The city’s $4 million-plus housing sales increased 50% year-over-year to six properties sold. Consistent with 2021, MLS reported no ultra-luxury home sales in Calgary of over $10 million in 2022.

Calgary’s top-tier real estate market eased slightly in the second half of the year as rising interest rates and the cost of inflation dulled real estate sales between $1–2 million, which comprised 90% of Calgary sales over $1 million in 2022. Overall, residential real estate sales over $1 million contracted 13% to 419 total properties sold between July 1– December 31. During this time, Calgary’s $4 million-plus luxury sales fell to one home sold compared to three sales in the last half of 2021. According to experts from Sotheby’s International Realty Canada, sales activity was hampered in the latter half of the year by a shortage of available inventory rather than a lack of consumer confidence or demand. This underlying optimism is a promising indicator for a healthy market at the outset of 2023.

Comprising 88% of the city’s $1 million-plus residential real estate transactions in 2022, Calgary saw single family home sales over $1 million increase 12% year-over-year in 2022 to 1,126 homes sold. Six single family homes in the luxury $4 million-plus segment sold in 2022, doubling from the three home sales reported in this price segment in 2021. Limited listing availability, rising home prices, and increasing buyer selectiveness led to a slight pullback in sales activity in the latter half of the year. Between July 1 – December 31, single family home sales over $1 million fell by 20% to 354 total properties sold, while luxury single family home sales over $4 million decreased to one home sold, compared to three sold in the last half of 2021. By December of 2022, according to the Calgary Real Estate Board, Calgary’s single family home market posted 23% fewer listings year-over-year overall, with improvements to listing inventory that created more balanced conditions in the market’s higher end.

With the average price of row and semi-detached homes in Calgary up 14% and 9% year-over-year, respectively in December 2022, the city’s luxury attached home market showed strong demand and solid gains in 2022. Overall, $1 million-plus attached home sales surged a significant 68% year-over-year to 111 homes sold in 2022. Consistent with 2021 numbers, there were no $4 million-plus attached home sales reported in 2022. Despite the growing pressures of rising interest rates on entry-level luxury home buyers in the latter half of the year, attached home sales over $1 million were up 44% year-over-year between July 1– December 31, to 39 homes sold.

Calgary’s luxury condominium market posted the strongest year-over-year sales gains of Canada’s largest metropolitan areas in 2022, driven by the revitalization of the downtown core given the city’s strong economic recovery, ongoing job gains and in-migration of young professionals and families. Overall, condominium sales over $1 million increased a notable 79% year-over-year to 43 properties sold. Of these $1 million-plus condominium sales in 2022, 26 did so between July 1–December 31, a substantial 73% year-over-year increase. There were no luxury condominium sales over $4 million in all of 2022, compared to one transaction in 2021.

Boasting some of the country’s most accessible pricing in real estate and now ranking as the third most livable city in the world according to the Economist Intelligence Unit’s 2022 Global Livability Index, the City of Calgary has emerged to prominence on the national stage as a destination market for conventional and luxury housing, as well as a desirable lifestyle. Furthermore, the city’s broadening economy, as well as the Government of Alberta’s projected $12.3 billion budget surplus for 2022 and its projected 2.7% provincial GDP increase for 2023, positions Calgary to weather economic challenges with greater resilience than other major Canadian cities. As a result, Sotheby’s International Realty Canada experts anticipate continued momentum in the city’s luxury real estate market into the initial months of 2023, even as the introduction of new inventory eases the higher-end market to more balanced conditions.

Greater Toronto Area

Consumer demand for luxury real estate in the country’s largest housing market maintained stamina in 2022, even as sales activity and price escalation calmed across the Greater Toronto Area (Durham, Halton, Peel, Toronto and York). As the region absorbed the impact of a rapid battery of interest rate hikes and the pressures of tightening inventory, and as market conditions normalized from the extreme highs of the pandemic era, local demand for housing mobility remained undiminished. According to Sotheby’s International Realty Canada experts, consumer and industry confidence in the long term fundamentals and performance of the local housing market remains unwavering. However, as the market came into balance through the course of 2022, prospective home buyers and investors became increasingly willing to wait for fresh inventory and favourable price declines and less willing to compromise on desired home features and conditions. As a result, luxury properties priced above new market conditions languished unsold on the market, while those in premier condition and priced appropriately for new norms garnered qualified interest and offers, resulting in successful sales.

As a result, following 2021, a year that saw GTA luxury residential real estate sales over $4 million (condominiums, attached and single family homes) soar 224% year-over-year, the market gradually normalized over the course of 2022, resulting in a 24% annual decline in $4 million-plus sales to 611 properties sold in 2022. Ultra-luxury sales over $10 million contracted 29% year-over-year to 22 properties sold on MLS. Overall, real estate transactions above the $1 million mark were down 28% to 38,022 properties sold in the GTA in 2022. Within the City of Toronto, luxury sales over $4 million fell 22% year-over-year to 364 properties sold in 2022. Of these, ten properties sold over $10 million, down 44% from 2021 levels. Overall, top-tier sales over $1 million in the City of Toronto decreased 25% from 2021 to 12,017 properties sold.

Despite robust consumer demand and healthy, albeit moderated levels of activity, luxury sales in the last half of 2022 reflected growing tensions between home sellers with elevated price expectations and buyers prepared to wait for new listings inventory, softening prices and, ultimately, a property that met their criteria. From July 1–December 31, the GTA’s $4 million-plus sales saw a 55% decline to 175 properties sold, while ultra-luxury sales over $10 million fell to six units sold from 16 properties sold in the last half of 2021. During this period, sales over $1 million decreased 50% year-over-year to 11,660 properties sold. City of Toronto sales over $4 million between July 1–December 31 fell 58% year-over-year to 98 properties sold, while sales over $10 million decreased to three units sold compared to ten in the last half of 2021. $1 million-plus sales were down 46% year-over-year in the latter half of 2022, at 3,773 properties sold.

The GTA luxury condominium market gradually de-escalated from its pandemic era of over-exuberance to end 2022 in a more balanced state. Overall luxury condominium sales over $4 million were down a moderate 29% year-over-year to 30 units sold in 2022, with no ultra-luxury transactions over $10 million on MLS compared to two units sold above this price-point in 2021. Overall, $1 million-plus sales were up a modest 6% year-over-year to 3,389 units sold in 2022.

The condo market’s steady normalization was reflected in the last half of 2022, as sales over $4 million fell 52% year-over-year to 13 condominiums sold, while ultra-luxury sales over $10 million remained quiet, as was the case in the last half of 2021. During this period, GTA condo sales over $1 million were down 43% overall to 910 properties sold. Between July 1–December 31, condominium sales over $4 million in the City of Toronto dipped 54% year-over-year to 12 properties sold, while the market over $10 million remained quiet, as was the case in the last half of 2021. Overall, $1 million-plus sales in the city declined 45% year-over-year in the latter half of 2022 to 685 condominiums sold.

The region’s crippling shortage of top-tier attached homes continued to challenge buyers even as market conditions normalized. In 2022, $4 million-plus attached home sales fell 25% from the previous year’s sales levels to 12 homes sold, all in the City of Toronto, while the $10 million attached home segment remained quiet. Overall, attached home sales over $1 million fell 10% to 8,253 homes sold in the GTA. Overall, the City of Toronto $1 million-plus attached home sales were down 26% to 2,780 units sold overall.

Despite underlying demand from diverse consumers, luxury attached home sales activity calmed through the latter half of 2022. In the GTA, two attached homes sold over $4 million compared to 11 units sold between July 1– December 31, 2021, with all transactions taking place within the City of Toronto. During this period, GTA sales over $1 million were down 56% year-over-year to 2,027 properties sold, while $1 million-plus attached home sales in the City of Toronto were down 50% year-over-year to 799 properties sold in the last half of 2022.

In 2022, the GTA’s luxury single family home market evolved to more balanced conditions, even as the temporary withdrawal of sellers from uncertain market conditions amplified the region’s continued deficit of housing supply. Sales over $4 million were down 23% from 2021’s record highs to 569 homes sold in 2022. Ultra-luxury sales over $10 million fell 24% from to 22 homes sold in 2022. Overall, $1 million-plus single family home sales saw an annual decline of 35% year-over-year to 26,380 homes sold. Annual City of Toronto single family home sales over $4 million and $10 million were down 21% and 41% year-over-year to 323 and 10 homes sold in 2022, while sales over $1 million fell 31% to 6,876 homes sold.

GTA luxury single family home sales activity in the latter half of 2022 reflected a market in transition. Luxury sales over $4 million fell to 160 properties sold during this period, down 55% year-over-year, while six ultra-luxury homes sold over $10 million, down from 15 properties sold in the latter half of 2021. GTA single family home sales over $1 million were down 50% year-over-year in the latter half of 2022, with 8,723 homes sold overall. During this time, City of Toronto single family home sales over $4 million fell 57% year-over-year to 84 properties sold. Of these, three homes sold over $10 million compared to nine sold above this price threshold in the last half of 2021. During this time, $1 million-plus sales contracted 48% to 2,289 transactions.

Despite short-term uncertainty, the Greater Toronto Area’s luxury housing market continues to weather the headwinds of rising interest rates, slowing economic growth and mounting consumer inflation from a position of underlying strength, both as Canada’s largest economic region, as well as the country’s top destination for immigration, with 29.5% of recent immigrants to Canada settling in the region, according to Statistics Canada. As sellers’ price expectations moderate in the upcoming months and as inventory levels replenish in premier neighbourhoods in the spring, activity is expected to renew against a backdrop that is now far more favourable to buyers and investors than in recent years.

Montreal

Following a record-breaking 2021 that saw luxury residential real estate sales (condominiums, attached and single family homes) over $4 million soar 171% year-over-year, the City of Montreal’s luxury housing market stabilized to balanced market conditions in 2022. Growing consumer unease with shifting market conditions sparked by multiple Bank of Canada rate hikes, was partially tempered by continued job gains and economic performance in the city. However, despite underlying consumer confidence in both the fundamentals of the economy and the housing market, bidding wars faded from market norms over the course of 2022, and property listings required increased marketing and time on the market to attract qualified offers. While housing prices remained resilient in 2022, they are expected to gradually ease across several conventional and luxury market segments in the coming year.

Overall, Montreal’s $1 million-plus residential sales (condominiums, attached and single family homes) decreased 18% year-over-year to 1,476 total units sold in 2022, while the city’s luxury $4 million-plus market held steady, posting a nominal increase of 2%, with 42 property sales reported in this price segment. Montreal recorded no ultra-luxury $10 million-plus sales on MLS in 2022 compared to two properties sold above this price point in 2021.

Luxury sales activity and velocity slowed markedly in the latter half of 2022 as market uncertainty dampened real estate consumer sentiment. Between July 1 – December 31, top-tier residential real estate sales over $1 million saw an annual decline of 38%, with 509 total properties sold. Of these homes sold, 19 did so in the luxury $4 million-plus price segment, marking a decrease of 30% year-over-year.

Montreal’s luxury condominium market, which has seen a steady influx of new and resale inventory in recent years, remained robust throughout 2022 and experienced a less pronounced year-over-year decline in sales volume than the city’s luxury single family and attached home segments. Overall, top-tier condominium sales over $1 million held relatively steady, contracting 5% year-over-over to 416 total properties sold. Montreal’s luxury $4 million-plus condominium market was notably strong, posting gains of 86% year-over-year to 13 units sold.

Despite resilient local demand for urban, high density luxury housing, the city’s top-tier condominium market calmed in the latter half of 2022 as rising interest rates and general market uncertainty impacted the entry-level luxury home buyer. Overall, from July 1 – December 31, top-tier condominium sales over $1 million decreased by 36% year-over-year. During this time, five $4 million-plus condominium sales were recorded, down from six sold in the last half of 2021. According to Sotheby’s International Realty Québec experts, the completion of new construction and pre-construction luxury condominiums over the next three years will add a consequential volume of inventory to the market, with the potential of impacting prices; however, the city’s most prestigious condominium brands and addresses are expected to continue to attract steady local and international demand.

Montreal’s luxury attached home market saw sales recede in 2022 as vanishing inventory limited prospective transactions. Overall, attached home sales over $1 million saw a year-over-year decrease of 23% in 2022, with 445 properties sold. Of these $1 million-plus transactions, one did so in the $4 million-plus price bracket, down from two properties sold above this price point in 2021. In the second half of the year, top-tier attached home sales over $1 million decreased 41% year-over-year to 139 properties sold. There were no sales over $4 million during this time, compared to two properties sold in the same period of 2021.

Montreal’s top-tier single family home market saw the beginnings of a shift toward a buyers’ market in 2022. Overall, top-tier single family home sales over $1 million decreased 22% year-over-year to 615 properties sold. The luxury $4 million-plus single family home market, however, saw a less pronounced decline indicating steadier demand for premier luxury properties. The city saw 28 total transactions in this price bracket, a decrease of 13% from 2021 levels.

In the second half of 2022, between July 1 – December 31, single family home sales over $1 million were down 38% to 223 properties sold. Luxury single family home sales over $4 million posted a moderate decrease of 26% year-over-year, with 14 properties sold between July 1 – December 31. No homes were sold over $10 million on MLS, compared to one transaction recorded in the second half of 2021.

Despite recent headwinds, Montreal’s luxury real estate market is well-established on the national and global stage as a desirable location to live, work and study. In welcoming 12.2% of new Canadian immigrants in 2021, the metropolitan area also remains the second highest destination for new immigrants to Canada, and with them, new demand for conventional and luxury housing. With sound underlying market fundamentals, Sotheby’s International Realty Canada experts anticipate that the city’s market will remain balanced into the initial months of 2023, enabling both buyers and sellers to strategically pursue opportunities.

source: vancouversun.com

City of Vancouver has the steepest municipal fees for new high-rise residential buildings in Canada

Mon, 16 Jan 2023 18:43:29 GMT

The City of Vancouver has the highest fees in exchange for the approval of new high-rise residential building construction amongst major Canadian municipal governments, according to a new report by Canadian Home Builders’ Association (CHBA).

The average total cost of the various charges levied within Vancouver on new high-rise housing is $125,542 per unit or $157 per sq ft of unit floor area. This is up by 25% compared to 2020, when average fees were $100,679 per unit, and it includes fees such as development cost levies (DCLs) and community amenity contributions (CACs).

That is nearly $15,000 per unit or $18 per sq ft more than the next highest fees charged by a Canadian municipality — the Greater Toronto suburban city of Markham.

The City of Toronto has the third highest fees, reaching an average of $99,894 per unit or $125 per sq ft. This is up by 31% since 2020.

Metro Vancouver’s suburban city of Surrey imposes average fees of $48,654 per unit or $61 per sq ft, which is closer to the national combined average of $41,353 per unit or $52 per sq ft for the 20 municipal governments evaluated.

The City of Burnaby’s average fees are far lower than those of Vancouver and Surrey’s, hovering at $19,256 per unit or $24 per sq ft.

But the hikes within Burnaby and Surrey were amongst the highest in the country, up by 54% and 37%, respectively, from 2020.

And in Calgary and Edmonton, the average fees charged by their municipal governments are $16,990 per unit or $21 per sq and $6,599 per unit or $8 per sq ft, respectively.

CHBA’s analysis and comparison of the 2022 performances of municipal government processes for approving housing were conducted by Altus Group Economic Consulting.

While municipal governments have previously maintained that their fees are intended to capture a portion of the value of growing land values for public benefits and to cover the higher operating and capital costs within urban environments, the CHBA report suggested there may be unintended consequences if this revenue-generation strategy goes too far in one direction by creating an added layer of costs that are ultimately passed on to the homebuyer.

“Higher municipal charges (like escalating construction costs or other costs) increase the price ‘floor’ that units need to be sold at to be feasible to the developing landowner and home builder. If fewer units can sell at prices that cover increased costs, fewer units will get built,” reads the report.

But for average fees for new low-rise residential building construction, the City of Vancouver comes in the middle of the pack, ranking 10th highest out of the 20 municipal governments evaluated.

Vancouver’s municipal government average fees for low-rise residential construction is $61,414 per unit or $28 per sq ft — essentially aligned with the 20-city average of $61,582 per unit or $28 per sq ft. However, this is up by 29% from 2020.

The City of Toronto tops the list with the highest low-rise fees, with an average of $189,325 per unit or $85 per sq ft, representing a hike of 21% from 2020.

The City of Surrey has the sixth highest low-rise cost — $84,678 per unit or $38 per sq ft, representing a 62% increase from two years ago. But the City of Burnaby is lower than both Vancouver and Surrey, with its fees hovering at $29,533 per unit or $13 per sq ft — similar to the City of Edmontons’s $29,359 per unit or $13 per sq ft. Burnaby and Edmonton’s average fees went up by 43% and 34%, respectively, compared to 2020.

The City of Calgary’s low-rise fees average is $42,800 per unit or $19 per sq ft, representing an increase of 15% since 2020.

“The disproportionate costs per square foot in municipal charges towards high-rise puts at risk municipal objectives for increased infill and intensification. This could hinder utilization of public infrastructure investments in urbanized areas, such as major transit station areas, or transit corridors,” adds the report.

B.C. becomes first province to require 3-day cooling-off period for homebuyers

Thu, 05 Jan 2023 08:05:39 GMT

New protection meant to give purchasers more time to arrange financing or home inspections

British Columbia has become the first province to require a three-day cooling-off period for buyers after they've signed an agreement to purchase a home.

The government said the new homebuyer protection period is designed to give purchasers more time to arrange financing or home inspections after a deal has been accepted — details that were neglected in past sizzling housing markets, it said in a statement.

The extra days would also give buyers more time to consider if the purchase is right for them, amid high-pressure sales or as interest rates climb.

Tsur Somerville, a professor at the University of British Columbia's Sauder School of Business, said the change, which took effect on Tuesday, is targeting a concern that isn't a problem in the current cooler market.

The B.C. Real Estate Association reported 4,512 residential sales in November, a drop of more than 50 per cent from the year before. The average home price in B.C. in December 2021 was $984,000, compared with $904,000 in November 2022.

Somerville said sellers no longer have dozens of buyers willing to give up protections like home inspections to push their bid to the top, the way they did when the plan was unveiled in 2021.

He said having the protection in place is important for the next time the market heats up, but the situation should be monitored for a potential power imbalance that could disadvantage sellers.

"We're going to get back into times when the market is very much a seller's market. These things are cyclical,'' he said.

"So I think it's important to have in place, but I think it's also important to monitor it and see what's going on.''

Trevor Koot, CEO of the B.C. Real Estate Association, said the new rules were not what was needed when they were announced in 2021 and will have no impact in the current market.

"Every transaction now has conditions on it, and home inspections, and appraisals, and we're back to a balanced market where buyers can come in and be rational and be reasonable,'' he said.

Even in a hot market, a three-day wait period is not enough to make a difference, since it takes much longer than that to get access to home inspections and other supports, he added.

In 2021, the association made 34 recommendations to the government, including a five-day mandatory listing period for properties to prevent bully offers.

"Instead of giving the buyer three days after, this gave every party that was interested in a property, including the seller, that five days to be fair and reasonable,'' Koot said.

"And it gave the gift of time to everybody, not just the one side.''

The province says buyers who back out of a sale within the three-day period will be hit with a cancellation fee of $250 for every $100,000 of a home's purchase price, to ensure transactions are taken seriously.

In a statement, Finance Minister Katrine Conroy said the measures will protect buyers and strengthen public confidence in the real estate market.

Source : cbc.ca

Impact of foreign buyer ban on North Shore real estate uncertain

Fri, 23 Dec 2022 11:21:59 GMT

A federal ban on foreigners buying residential real estate is set to go into effect in January.

But local real estate agents and pundits say they’re still in the dark about exactly how the ban will work and what it will mean to the real estate market on the North Shore.

Since last spring, when Ottawa first announced its intention to ban foreign buyers, “it’s been under the radar,” said Jason Soprovich, a West Vancouver real estate agent who specializes in luxury homes.

“We’ve been told that it’s coming into effect, and that it’s going to affect personal purchases of international buyers across the entire country, and that there will be a moratorium for two years, and that it will affect corporations being able to purchase as well.”

What’s less clear is what the impact will be, he said.

Impact of foreign buying ban unclear

The federal government introduced the new rules among efforts to dampen housing prices.

But Andy Yan, director of SFU’s city program, said that move has come about a decade too late. Between 2011 and 2016, foreigner buyers played an outsize role in some real estate markets, notably including West Vancouver, which became popular with affluent purchasers from China.

At that time, loose lending rules governing foreigners meant it was often easier to get a loan as a foreign student with assets than it was as a Canadian seeking a mortgage, said Yan.

The result was many foreigners were happy to use local real estate as an investment, he said.

Resulting rising prices are “what happens when residential property becomes a global commodity,” said Yan.

Going back to 2016, foreign buyers made up 24 per cent of West Vancouver real estate purchasers in the weeks leading up to the introduction of the provincial foreign buyers tax.

But once that tax was put in place in 2016, foreigners have made up a much smaller percentage of purchasers, said Soprovich.

During pandemic number of foreign buyers fell

As COVID-19 closed borders in 2020 and 2021, foreigners largely disappeared from real estate sales, he said. The real estate boom of last year was fuelled entirely by domestic buyers, said Soprovich.

Yan said foreigners haven’t been dissuaded entirely from buying local real estate. In fact, he said he wouldn’t be surprised to see a spike before the ban officially goes into place.

He added the two-year moratorium is a temporary measure and may be intended more for political appearances than to accomplish policy goals.

About nine per cent of West Van homes foreign owned

According to figures from the Ministry of Finance, about nine per cent of homes in West Vancouver have some kind of foreign ownership. In the District of North Vancouver, that percentage was lower – at about three per cent. In the City of North Vancouver, foreigners account for about five per cent of residential property owners.

Foreigners also pay about 60 per cent of the speculation and vacancy tax.

In West Vancouver, the amount paid – $6.58 million – is the third highest in the province.

Source: nsnews.com

Average Canadian house price declined again in November, to $632,802

Fri, 23 Dec 2022 11:17:16 GMT

Selling price of typical home has fallen 12% since last year and is down nearly $200K since February

The slowdown underway in Canada's housing market continued last month, new figures from the Canadian Real Estate Association showed Thursday, with the average selling price falling to just over $630,000, and the number of home sales off by almost 40 per cent.

The group, which represents more than 100,000 realtors across the country, said that the number of homes sold in November fell by 38.9 per cent from the same month a year ago. November isn't typically a busy month for home sales, as cooler weather often pushes buyers to the sidelines this time of year.

But the housing market was even chillier than usual this November, with a little over 33,000 homes being sold during the month. That's down about 10 per cent from the typical November sales pace, and down from almost 50,000 in the same month in 2021.

The average selling price of a home that went on CREA's Multiple Listings Service was $632,802. That's 12 per cent below what it was a year ago, and down from 22 per cent from the peak hit in February of this year.

That was before the Bank of Canada started its aggressive campaign of rate hikes, which has taken the wind out of the market's sails by making it much more expensive to borrow money.

CREA says the average selling price can be a misleading picture of the market, since it is easily skewed by sales in big expensive cities like Toronto and Vancouver, so it trumpets another number, the House Price Index, as a better gauge of the market.

The HPI fell by 1.4 per cent during the month to $744,000, and is now down by more than 11 per cent from its February peak, after having fallen for nine months in a row.

"There were no big surprises in the November housing numbers, with the data showing the same trends of lower sales and moderating prices we've been seeing for a number of months now," said CREA chair Jill Oudil.

That price moderation is welcome news for recent buyers like Yildiz Marcelin, who purchased a townhouse in Toronto.

She and her family have owned a condominium in the city since 2016, but with daughters growing up fast, they have been looking for more space for years.

Economist Rishi Sondhi with TD Bank says the numbers released Thursday paint a clear picture of a market that is slowing down, and is likely to continue to do so.

"Demand continues to decline under the weight of rising interest rates," he said, noting that the central bank has already raised its interest rate once since the time period covered in today's data release. "We think they'll move their rate slightly higher early next year, [but] all of this points to continued sales declines in the coming months."

Source: cbc.ca