2 major Banks in Canada are giving employees an extra paid day off this year

April 9th, 2021

RBC to give staff extra day off

Kevin Orland
Mortgage Broker News

Royal Bank of Canada and Toronto-Dominion Bank are giving employees an extra paid day off this year, as a lengthy pandemic shows signs of worsening in Canada.

RBC Chief Executive Officer Dave McKay acknowledged that staff are more exhausted now than at any time during the Covid-19 pandemic. The bank needs to “eliminate the stigma associated with asking for time to focus, concentrate, and in some cases, log off and recharge,” McKay said in a companywide memo on Thursday.

Toronto-Dominion also told employees they would get an additional day off, with Chief Executive Bharat Masrani encouraging staff to take it when they need it most. “After a year of sacrifice and disruption, we must all endure these challenging circumstances for a bit longer,” Masrani said in a memo. “I know that this has not been easy, and everyone is tired.”

Burnout has become a more pressing issue for financial firms as the pandemic moves into its second year and some lines of business, including mergers and acquisitions, see a sustained boom in activity.

Last month, Goldman Sachs Group Inc. CEO David Solomon said the firm would improve enforcement of a rule designed to ensure junior bankers don’t have to work on Saturdays. His memo came after junior analysts gave managers a presentation showing that some worked 100 hours in a week.

RBC, Canada’s largest lender, is also giving its roughly 86,000 employees worldwide a free, one-year subscription to Headspace, a meditation and sleep app. An annual subscription costs $69.99, according to Headspace’s website.

“Beyond this extra day off, we recognize the ongoing pressures of the pandemic, especially for those in regions that have reverted back into lockdown,” McKay said in the memo. Those regions include RBC’s home province of Ontario, which declared a statement of emergency on Wednesday for the third time since the beginning of the pandemic.

The CEO encouraged the bank’s employees to take their vacation time and to book the extra off day with their managers. He said that during the pandemic, he has taken a couple of vacations and used them to spend more time outside, learn new songs on his guitar and read more than he has in years.

“I encourage all of you to prioritize your personal time and continue to be mindful about work-life boundaries wherever possible,” McKay wrote.


Copyright © 2021 Key Media

Housing market conditions put lenders at financial risk regulators need to take “proactive action”

April 9th, 2021

Housing bubble fears spur Canada to weigh tighter mortgage rules

Mortgage Broker News

Canada’s bank regulator is proposing tighter mortgage qualification rules to make it more difficult for home buyers to secure financing, a move aimed at cooling the nation’s booming real-estate market.

The Office of the Superintendent of Financial Institutions said it will setup a new benchmark interest rate used to determine whether people can qualify for uninsured mortgages. Home buyers will have to show they can afford a minimum rate of 5.25%. The current threshold, based on posted rates of Canada’s six largest lenders, is 4.79%.

“Sound residential mortgage underwriting is always important for the safety and stability of financial institutions,” Jeremy Rudin, head of the Ottawa-based agency, said in a statement. “Today it is more important than ever.”

The move comes amid a surge in housing prices that’s raising concern among policy makers and economists. Cheap mortgages and new remote-working conditions have spurred a frenzy of demand for more spacious homes, with house hunters bidding up prices across the country.

The Canadian Real Estate Association calculates prices are up 17% nationally over the past 12 months. Twelve major markets — or about one quarter of the total — have posted price gains of more than 30%.

Royal Bank of Canada Chief Executive Officer Dave McKay lauded the regulator’s move.

“I’m encouraged that that is an implementable, short-term policy that does withdraw some borrowers who are stretching themselves too much with low rates into too large of a house,” McKay said on BNN Bloomberg television.

The tighter qualification restrictions will reduce the buying power of households by about 4.5%, according to estimates by Derek Holt, an economist at Bank of Nova Scotia.

OSFI said housing market conditions “have the potential to put lenders at increased financial risk,” forcing regulators to take “proactive action.” The regulator said it will revisit the calibration of the qualifying rate at least once a year to ensure it remains appropriate. The plan is to implement the changes on June 1, after consultations.

In the meantime, it’s watching how banks handle the increased mortgage demand. “We are looking for heightened vigilance from lenders on collateral management, income verification, and debt servicing,” Rudin said at a news conference. “We will also be monitoring for institutions extending amortization periods and increasing debt servicing limits.”

The move impacts the uninsured mortgage space that is overseen by OSFI. The federal government is in charge of mortgage qualification for insured mortgages. There was no indication in the statement that the government planned to follow the move, and requests for comment from the finance department weren’t immediately returned.

One unintended consequence could be to temporarily accelerate the market as buyers rush in before the changes are implemented.

“We may well see an even hotter spring housing market as a consequence to OSFI’s move,” Holt said by email. “We’ll get more pulled-forward demand.”

Paul Taylor, head of Mortgage Professionals Canada, an industry group, said he’s skeptical the move will make much of a difference given high levels of investors entering the market who won’t be impacted.

“Even with these measures in place I don’t think you’re going to see the housing market really calm down,” Taylor said.

–With assistance from Shelly Hagan, Kevin Orland, Erik Hertzberg and Ari Altstedter.


Copyright © 2021 Key Media

Commercial Development Site sells for $6.75 Million located at Hastings Street, Burnaby, B.C.

April 8th, 2021

Two adjacent N. Burnaby commercial lots sell for $6.7 million

Goodman Commercial Inc.
Western Investor

One-third of Canadian professionals currently working from home due to the pandemic

April 7th, 2021

Hard core of work-from-homers won?t return to office

Wl Staff
Western Investor

 — More than half want to work only part time in the office. |CBRE

About one-third of Canadian professionals currently working from home due to the pandemic would quit and look for a new job if required to be in the office full time, according to a new survey by global staffing firm Robert Half.

More than half of all employees surveyed (51 per cent) said they prefer a hybrid work arrangement, where they can divide time between the office and another location. Professionals, however, also expressed the hesitations about working from home full time, citing loss of relationships with co-workers, fewer career advanced opportunities and decreased productivity.

In addition, workers may not be ready to return to the office, without some incentives to sweeten the welcome back.  Professionals surveyed said the top ways their company can support them include allowing greater freedom to set office hours, employer-paid commuting costs, a relaxed dress code and providing childcare.

“After more than a year of uncertainty and pandemic-induced remote work, there is a growing desire among some business leaders to return to business as usual, including welcoming employees back to the office once it is considered safe,” said David King, Canadian senior district president of Robert Half. “However, companies should be prepared for a potential disconnect between their ideal work structures and that of their employees.”

The online survey was developed by Robert Half and conducted by an independent research firm from March 9-16, 2021. It includes responses from more than 500 workers 18 years of age or older at companies in Canada.



© Copyright 2020 Western Investor

Toronto average price of homes sold CA$1.1 million during the month, up 21.6% from last March

April 6th, 2021

Toronto home prices surge as debate rages

Ari Altstedter
Mortgage Broker News

 Toronto home values continued to swell in March, bringing annual average price gains to more than 20% and adding fuel to a raging debate about whether policy makers should try to cool the market.

New listings were up 57% from March 2020, when the onset of the pandemic temporarily caused a freeze in real estate activity. But the new supply was not able to keep up with demand spurred by low borrowing costs and demand for bigger homes, especially in the suburbs, a report from the Toronto Regional Real Estate Board said Tuesday.

Across the metropolitan area, the average price of all homes sold was CA$1.1 million during the month, up 21.6% from last March. Detached homes in the 905 area code, which surrounds the city’s core, sold for 31.4% more, an average of CA$1.32 million.

“The potential for double-digit price growth could continue without a meaningful increase in the supply of homes available for sale,” Jason Mercer, the Toronto real estate board’s chief market analyst, said in a news release. “This will become more apparent as population growth resumes over the next year.”

Cheap mortgages and new remote-working conditions have spurred a frenzy for more spacious homes, with house hunters bidding up prices in Canada’s largest cities and then looking further afield when they’re priced out. The resumption of more normal levels of immigration, which was slowed by the pandemic in 2020, is another source of demand.

The rapid price appreciation has spurred a debate among prominent economists at Canada’s largest banks over whether Prime Minister Justin Trudeau’s government or other policy makers should step in.

Canada, on Thursday, March 11, 2021. The buying, selling and building of homes in Canada takes up a larger share of the economy than it does in any other developed country in the world, according to the Bank of International Settlements, and also soaks up a larger share of investment capital than in any of Canada’s peers.

The chief economist of Bank of Nova Scotia, Canada’s third largest lender, said policy makers should not rush to act because price gains are being driven by a lack of homes for sale. Many sellers were sidelined by the pandemic last year, but that problem could take care of itself as the traditional spring selling season gets underway, Jean-Francois Perrault said in a report released Sunday.

That came after Toronto-Dominion Bank’s top executive, Bharat Masrani, told Bloomberg that governments should be cautious in taking action. Meanwhile, economists at Royal Bank of Canada and Bank of Montreal are calling for more urgent action to keep prices from becoming completely unaffordable for first-time buyers and head off the possibility of a destabilizing crash later.

Policy makers so far have not signalled plans to take action, but some have expressed concern. Canada Mortgage & Housing Corp., a federal agency that monitors the market, last month raised its assessment of Toronto’s vulnerability to a sudden drop in prices to high, citing the rapid climb in prices. There are five markets in Canada with that designation.

Toronto’s benchmark price index, a measure that takes into account the mix of types of properties sold, has posted a 10.8% gain in the first three months of 2021, the fastest period of appreciation the city has seen since early 2017. Back then, the Ontario government stepped in with a number of measures, including a tax on foreign buyers.


Copyright © 2021 Key Media

Raised $10 million funding to use laser scans and AI to identify errors prior construction process

April 1st, 2021

Platform that uses AI to flag construction mistakes raises $10 million

Kelsey Pudloski

Mistakes happen, but when it comes to new construction, even minor blunders can cost builders untold amounts of time and money. Enter Avvir, a startup that uses laser scans and artificial intelligence to identify errors during the construction process. 

Last week, the company announced that it had raised $10 million in a round of funding led by Trust Ventures, a venture capital firm that counts Koch Industries among its investors. Avvir plans to use the money to add more employees and enhance its software.

Founded in 2017 by Raffi Holzer and Tira Odhner, Avvir asserts that its platform can locate problem areas within one-eighth inch of accuracy. The software compares Building Information Modeling (BIM), essentially a high-tech version of traditional blueprints, with laser scans to flag any discrepancies.

The company claims their mobile scanners can be used by anyone to examine 30,000 square feet per hour even if construction is ongoing. Once a problem has been identified, the construction team is able to take action and the BIM is updated automatically. Another useful feature is the topographic maps that are generated from the scans. These can be inspected after a concrete pour to determine whether slabs are level.

The software can also track the progress of a project, measuring it against the estimated schedule to “highlight where the timeline is off target” and readjust completion dates if necessary. Understanding what work has been completed helps subcontractors get paid in a timely manner, too, reducing delays from months to weeks.

New York-based Avvir is currently valued at $40 million and raised an additional $5 million in previous rounds of funding. In a recent interview with VentureBeat, CEO Raffi Holzer noted that Avvir has amassed roughly 12 customers and partners in the past year and expects its valuation to grow to $4.4 million by 2022.


© 2020 BuzzBuzzHome Corp.

Housing bubble might be coming due to pandemic-driven shift in buyer preferences

April 1st, 2021

How likely is a Canada housing crash?

Ephraim Vecina
Mortgage Broker News

Despite concerns surrounding overheated activity, a Canadian housing crash is unlikely unless there’s a spike in mortgage rates or a significant tightening of housing policy, according to a new report by Oxford Economics.

A housing bubble might be forming due to a pandemic-driven shift in buyer preferences, steadily depleting supply, and record-low mortgage rates, but this is ultimately unsustainable. On the contrary, the market’s probable trajectory is an eventual cooling, report co-authors Tony Stillo and Michael Davenport wrote.

“We then expect housing to increasingly reflect slowing underlying demographic fundamentals due to an ageing population that will experience slower growth,” the duo said. “We expect house price growth will slow to below the pace of household income growth for the rest of the decade. House prices should remain within household borrowing capacity despite a forecast of rising mortgage rates.”

Oxford Economics estimated that the nation’s senior population will almost double to nearly 12 million over the next three decades. This will make the elderly’s share of the Canadian population go up from one in five in 2020, to one in four by 2050.

Aside from an aging population, a decelerating trend in the number of new households will lead to a markedly cooler market over the long term.

“By 2050, the average private household will have 2.36 occupants compared with 2.43 people per household today,” Stillo and Davenport said. “Accordingly, we expect the rate of new household formation to steadily slow from its near-term 200,000 annual pace to 130,000 new households in 2050.”


Copyright © 2021 Key Media

Canadians are stretching and “worrying” sign of too much debt to buy into the nation’s hot housing market

April 1st, 2021

Bank of Canada issues warning

Ari Altstedter
Mortgage Broker News

 The Bank of Canada is seeing “worrying” signs that some Canadians are taking on too much debt to buy into the nation’s hot housing market.

In an interview with the Financial Post, Governor Tiff Macklem said there is evidence that loan levels relative to home values are growing — an indication that some borrowers could be overextending. He also warned people have begun to make purchases based on the belief prices will continue rising.

“Canadians are stretching and that is worrying.” Macklem said. “If Canadians are basing their decisions on the kinds of price increases that we’ve seen recently are going to continue indefinitely, that would be a mistake. They’re not sustainable.”

At the same time, Macklem indicated the central bank can do little given interest rates need to stay low to support the recovery.

His comments come amid increasingly urgent calls from economists for policy makers to cool the market. Over the past week, the Bank of Montreal’s Robert Kavcic and Robert Hogue at Royal Bank of Canada have issued reports warning officials they need to take steps to break the psychology of expecting continued gains in real estate. The ultimate concern is that rapid price appreciation could be destabilizing.

Among policies being suggested are taxes targeting speculators like the one implemented in New Zealand this month, or an end to the longstanding and popular tax exemption for capital gains on primary residences. Another idea getting attention is the elimination of blind bidding for homes that some analysts say unnecessarily inflates prices.

Both Kavcic and Hogue also identified a lack of housing supply as a major driver of the recent run up in home values.

Prime Minister Justin Trudeau’s government plans to introduce a tax on foreign non-resident home owners. Finance Minister Chrystia Freeland said last week she is watching the market closely, without detailing any specific intent to take additional action.

Last week, Canada’s national housing agency added three more cities to its list of markets highly vulnerable to a sharp price drop, including Toronto. Canada Mortgage and Housing Corp. also said the recent broad-based price appreciation means overheating risks are now a national phenomenon, rather than isolated to a few major metropolitan areas.


Copyright © 2021 Key Media

Real estate market is extremely hot starting the Q1 2021

April 1st, 2021

VERICO president gives his verdict on what will happen to the housing market

Fergal McAlinden
Mortgage Broker News

The current red-hot housing market is likely to slow down slightly when normal life resumes after the pandemic – although increasing immigration numbers may help offset some of that cooling-off, according to VERICO’s president and chief operating officer.

Mark Squire (pictured) told Mortgage Broker News that the market, while “quite unbelievable right now,” has been spurred largely by high demand for housing linked to the pandemic. “People that are working cannot go anywhere, so they are renovating or purchasing new homes or cottages,” he said.

“Will this continue once things return to normal? My perspective is that the housing market may cool a bit as people find new places to spend their money. That said, as the Canadian economy opens back up, we will start to see an increase in immigration again, which also supports and promotes housing sales.”

Rapidly rising house prices, coupled with that demand far outstripping supply, have led to some calls for the Canadian government to intervene to reduce the risk, raised by the Royal Bank of Canada, of “overheating” in the market. Squire noted that imbalance, not just in the oft-referenced Toronto and Vancouver markets, but throughout Canada.

“The market is quite unbelievable right now, and what I find truly interesting is that it’s not just the Greater Toronto and Greater Vancouver markets – it’s pretty much across the entire country,” he said.

“We’re witnessing a seller’s market, where the active listing to sales ratio is not balanced in seven of the 10 provinces.” 

Still, he said that potential government intervention in the housing market could prove a “double-edged sword” in the long run. “The housing market represents 10% of Canada’s GDP,” he said, “and when you look at it from a global perspective, housing in Canada is considered affordable on the world stage.

“I think something that we all need to come to terms with is that owning a house in Canada is not a right, but rather a privilege, and maybe not everyone will be able to enjoy that in their lifetime.”


Squire said that VERICO had seen a strong start to the year, propelled by that red-hot housing market, although he cautioned against making premature predictions for the rest of 2021. “The first two months… have been very strong, but let us keep in mind that the market is extremely hot right now,” he said.

“Our submission volumes for January and February were up over 90%, year over year. It really is hard to wrap your mind around it. We are well on track to exceed our impressive results from 2020; however, those results are to the end of the second month, and there is a lot of year left.”

Squire also weighed in on the debate currently spreading through the mortgage industry about technology platforms and the extent of freedom afforded to licensees to choose their own. “Our belief [at VERICO] has not changed,” he said. “‘Your business, your brand, your way.’ We are about choice – your choice.

“It cannot be your business if someone is telling you what to think or what to do. We say, ‘you’re in business for yourself, but not by yourself,’ meaning we are here to support you and provide you with tools, programs, and technology options all ‘a la carte.’ Most of these options are included in the monthly flat fee that the licensee pays, but again, it’s about choice – the broker owner’s choice, not ours.”

Squire said that despite VERICO’s swift reaction to the unique challenges posed by the pandemic, he would welcome a return to normality.  “We quickly adapted to Zoom meetings and hosted various webinars throughout the year,” he said. “We participated in the virtual Mindset conference, and held many sessions with industry leaders, as well as several education sessions profiling some of our members.

“In the end, nothing replaces the human-to-human contact that we are all missing.”


Copyright © 2021 Key Media

Bank of Canada Governor “Worrying”sign in Canada’s hot housing market to increase level of debt

March 31st, 2021

Mounting debt ‘worrying’ as Canadians stretch to chase rising home prices, says Bank of Canada governor

Bianca Bharti

 Bank of Canada Governor Tiff Macklem said he’s seeing “worrying” signs in Canada’s hot housing market, in which households are taking on increasing levels of debt to chase rising prices.

The central bank had largely stayed quiet on the housing market until February, when Macklem said it was showing signs of “excessive exuberance” as national real estate prices jumped 25 per cent from the year before.

“Since then, the housing market has continued to run strong across a variety of dimensions; price increases have continued at a pretty high rate,” Macklem said in an interview with the Financial Post on Wednesday.

“If you look at the household indebtedness, you are seeing, on average, the loan-to-value ratios are getting higher, particularly in the uninsured space. That suggests that Canadians are stretching and that is worrying.”

The central bank and other authorities are facing mounting pressure to address the overheating housing market, which the Canada Mortgage and Housing Corporation warned last week is becoming increasingly vulnerable to economic shocks.

However, CIBC’s deputy chief economist Benjamin Tal warned that just because the housing market is hot, does not mean the central bank should act.

“That’s not his domain, that’s the finance minister’s domain,” he told the Post. “People have to understand that he will cross the line if he starts talking about microprudential policies.”

Macklem himself stopped short of suggesting a policy response is necessary.

What gets us worried is when you start to see extrapolative expectations, or people starting to speculate on this, and houses become assets as opposed to something we live in

Bank of Canada Governor Tiff Macklem

“From our perspective, monetary policy is a blunt tool. It’s a macro-economic instrument. We have to look at the whole economy. The whole economy needs monetary policy support to support the recovery, get people back to work and get inflation back on target,” he said.

Tal reiterated Macklem’s view.

“The housing market is one part of the economy,” he said. “As a society, we have never been so sensitive to the risk of higher interest rates…. Every small increase in the interest rate can have a significant impact on the housing market and therefore, (Macklem) would like to see the market slow down before we have to raise interest rates.”

While the market continues to rise, some of Canada’s biggest banks have been leading the calls for a policy response of some kind.

In a report on Monday, Royal Bank of Canada senior economist Robert Hogue said the near-term outlook for homebuyers is “grim.”

“Smaller markets are losing some of their affordability advantage, which adds stress to buyers willing to move to a different town to find a home they can afford,” he wrote.

Last week, Hogue said policymakers needed to address the “overheating” in markets as it threatens to destabilize the economy, suck money from more productive areas and exacerbate inequality.

Bank of Montreal senior economist Robert Kavcic, in a Tuesday report, said “policy makers need to act immediately, in some form, to address the home price situation before the market is left exposed to more severe consequences down the road.”

While the state of the market can be explained to some extent by a fundamental shift in demands, there are other factors, like speculation, at play, the governor said.

“What gets us worried is when you start to see extrapolative expectations, or people starting to speculate on this, and houses become assets as opposed to something we live in. There certainly are some signs of extrapolative expectations,” Macklem said.

“If Canadians are basing their decisions on the kinds of price increases that we’ve seen recently are going to continue indefinitely, that would be a mistake. They’re not sustainable.”


© 2021 Financial Post