Addressing the challenges of electronic AGMs

May 28th, 2020

Addressing the challenges of electronic meetings

Tony Gioventu
The Province

Dear Tony:

What happens when an owner attempts to attend a general meeting that was issued as a proxy-only meeting for our annual general meeting?

Because our strata cannot safely social distance in our common room, the council determined we would conduct a proxy-only meeting and issued a restricted proxy to enable every owner to exercise their voting rights. Two owners showed up at our common room at the time of the scheduled meeting and insisted on attending. After a short discussion they left and chose not to issue a proxy for their units and now claim their voting rights were violated.

Of the 120 units in our building we did receive 94 proxies and every vote passed unanimously, so the outcomes would not have changed.

Do we have to consider reconvening the meeting or were we acting appropriately?

— Jana M. Richmond

Dear Jana:

Under the emergency orders issued at this time, the province permits strata corporations, associations and societies to conduct meetings electronically. Strata corporations may also adopt a bylaw that permits electronic meetings for annual and special general meetings.

If there is a meeting notice issued you have two options.

The first option is to hold a physical meeting that limits attendance and provides owners the convenience of submitting a restricted proxy to a council member or specific person attending to exercise those proxies.

The second option is an electronic meeting. Most strata communities are running these meetings by Zoom, there is no physical location as the meeting is electronic.

In either option if an eligible voter wants to attend, you have an obligation to accommodate their request.

The manageable solution is an electronic meeting where owners have to enter through an approved waiting room and may participate along with the council member(s) and manager/advisor who are facilitating and chairing the meeting.

No matter what option you choose for the restricted proxies to be exercised you must hold an actual meeting, and if that meeting is in person or virtual, plan to accommodate a small number of participants. Proxies are not absentee ballots. You must have a meeting for the proxy holder to be able to exercise those voting instructions. A proxy or restricted proxy is a convenience and for the privilege of each owner to ensure their voting rights are protected, their voting instructions are acted on under the restrictions of the proxy and there is a record of the instructions and the results of all votes. The benefit of issuing a restricted proxy is the reduction in contact and to enable the strata corporation to manage social distancing with safety while still conducting business.

The results of many electronic meetings with proxy options have seen a substantial increase in the number of voters participating and issuing a restricted proxy with a small number of voters participating in the meetings. On the surface this seems manageable and easy; however, once your property manager or strata council start writing a notice package for an electronic meeting, you discover electronic meetings require much more contemplation on how people register, how you identify eligible voters, how voting is conducted, how attendees are permitted to communicate and ask questions, how ballots and proxies are collected, scrutinized and reported.

Think about a conventional notice package and physical location meeting and the time that takes to develop, then triple the time involved with the notice and meeting time. This is adding substantial time and often requires a meeting facilitator to run the electronic meeting and manage registration through a waiting room, a person to review and summarize the voting from the restricted proxies and tabulate any ballots submitted or voting conducted during the meeting, a person to chair the meeting, and person to take minutes.

On behalf of strata owners and Condominium Home Owners Association members across British Columbia, all of our strata councils and managers deserve a great big thank you for stepping up at this time of restrictions and trying to work through the constant changes and challenges.

© 2020 Postmedia Network Inc

50 Electronic Avenue at 50 Electronic Avenue Port Moody 220 homes in the Phase 2 wood frame building by Panatch Group

May 28th, 2020

Panatch Group launches second phase of Port Moody’s 50 Electronic Avenue

Michael Bernard
The Province

It is every developer’s nightmare. You have everything in place for your opening day, and then your plans are dashed by an event completely beyond your control. With COVID-19 and the public safety orders banning events of more than 50 people, you have the makings of a true catastrophe.

It could have turned out that way for Kush Panatch and the March 21 launch of the second phase of his multi-unit residential development 50 Electronic Avenue in Port Moody, except that this developer has shown an uncanny ability to adapt to change.

The Panatch Group’s challenge was to address the need for people to socially distance while giving them a close-up look at a new home. “Some people wanted to get full information on what was available but were uncomfortable coming in (to the sales centre). So what do we show people?  We came up with the idea of hiring a professional videographer and featuring Jody Jobber, our sales director, conducting a virtual tour of the presentation suite.”

The result was a guided tour that was made available online. “Jody was nervous at first and had never done anything like that, but we told her to think of how she would do it if a real person was present,” said Panatch. That, combined with a robust list of more than 8,000 people who had registered their interest in the 358 homes in the two-stage development, led to an enviable start to the sales campaign. In less than two weeks, Panatch had 46 signed sales.

But that ability to act quickly isn’t the only reason 50 Electronic Avenue—named in honour of the radio and TV manufacturer, Chisholm Industries that produced products at the location for decades—has done so well. In fact, the seeds of success were sown more than 22 years ago when Panatch bought a 3.5-acre parcel of industrial land opposite Port Moody’s downtown. At that time it was simply a big industrial area with a sawmill, but Panatch saw the potential, even before the Westcoast Express and SkyTrain’s Evergreen Line hastened Port Moody’s development.

Story continues below

Even as phase-one sales were progressing two years ago, the company was taking careful note of what buyers wanted in condo living. Panatch began tinkering with the project’s second-phase plans, especially after being pleasantly surprised by the resounding success of one particular type of unit.

 “In phase one, we were blown away because in the first week we sold every one of our rooftop units,” Panatch said. “We always suspected we had the demand for that, but we never anticipated the strength of it. We had 24 rooftop units, and ended up with 34 offers. So, for our second phase we made some design changes, moved around units and ended up increasing the number of rooftop units to 32 from the original 14 planned.” With their private fenced and landscaped spaces accessed through a vertical door at the top of a flight of stairs, the units have been “over-the-top popular.”

The other change the company made was to increase the number of four-bedroom units in the second phase. Historically, such larger units have proved more difficult for developers to sell, but Panatch believes there is an increased demand for such larger spaces. He has found that baby boomers appear more willing to make the transition to condo life from single family homes if they are offered the space they need. 50 Electronic Avenue, for instance, offers suites as large as 1,635 square feet.

Nevertheless, the majority of suites offered at 50 Electronic Avenue are smaller in size. About 30 per cent are one-bedroom and one-bedroom and den homes, 60 per cent are two-bedroom or two-bedroom and den, with the remaining 10 per cent three- and four-bedroom models. The second phase has attracted a broad range of buyers, Panatch said. They include a 21-year-old professional who bought a home with some family help and young married couples from Yaletown and Burnaby’s Brentwood Town Centre seeking to start a family, to older retired couples downsizing from single-family homes in Port Moody.

Also attractive to buyers is the development’s close proximity to rapid transit, and the popularity of nearby amenities such as Rocky Point Park and the budding Brewery District. It also helps that 50 Electronic Avenue has a 9,000-square-foot, three-storey amenity centre called Club 50, which boasts a fitness facility, rooms for yoga and bike repairs, a dog wash, an arcade space, media room, social lounge with a large patio and a guest suite for visiting family and friends. There is also a one-acre, elevated private backyard with lawns, courtyards, urban gardens with water features, and a children’s playground. A feature popular with those in the ‘gig economy’ is co-working spaces with two boardrooms.

The homes, designed by Ciccozzi Architecture, have open floorplans with nine-foot ceilings. BYU Design has incorporated laminate wood flooring throughout, an integrated designer wardrobe with drawers in the master bedroom and closets with custom millwork organizers. The suites’ private deck or patio features power outlets and gas connections.

In the kitchen is a premium Bosch high-performance, stainless steel wall oven, a 30-inch gas cooktop, and a 36-inch Fisher & Paykel French door refrigerator with icemaker panelled to match the cabinetry. Also standard are a Bosch ultra-quiet dishwasher with custom panel, a Panasonic stainless steel microwave and a stainless steel Venmar hood fan. Polished quartz countertops are finished with a waterfall edge and there is a custom millwork pantry.

The bathrooms have a designer floating vanity, a large framed mirror with medicine cabinet and Soho white hexagon porcelain tile flooring. There is a frameless, clear tempered glass shower with handheld showerhead in the ensuite bathroom and a deep bathtub with handheld showerhead.

50 Electronic Avenue, Port Moody

Project address: 50 Electronic Ave., Port Moody

Project scale: Phase 2 of this 358-unit development consists of 220 woodframe homes, ranging from a one bedroom at 583 sq. ft. to four-bedroom plans at 1,635 sq. ft. Close to shopping, SkyTrain and West Coast Express and seaside amenities such as Rocky Point Park. Amenities include the 9,000-sq.-ft. three-storey “Club 50,” offering a fitness facility, dog wash, guest suite, bike repair rooms and co-working spaces, plus a one-acre elevated backyard with five distinct courtyards.

Prices: From $459,900

Developer: Panatch Group

Architect: Ciccozzi Architecture

Interior Design: BYU Design

Sales centre: 50 Electronic Avenue, Port Moody

Centre hours:  12 noon to 5 p.m. (by appointment only during COVID-19 social distancing).  Virtual appointments and tours available as well.

Sales phone: (604) 492-2202

Website: www.50electronicave.com

Completion Date: Late 2022

© 2020 Postmedia Network Inc

CMHC offers dire predictions for house-price drops in B.C.

May 28th, 2020

Dire predictions for house-price drops

Joanne Lee-Young
The Province

Canada’s national housing agency is continuing its grim forecasts for how hard the COVID-19 pandemic will hit home sales, prices and construction, including sharp drops for B.C.

But one local realtor said many people in the local real estate sector and construction industry believe Canada Mortgage and Housing Corp. is being too pessimistic.

Last week, CMHC CEO Evan Siddall told a parliamentary committee that Canadian house prices could drop by as much as a 18 per cent.

He also said that 20 per cent of mortgage holders who are deferring payments could be in arrears at the end of September, when the COVID-19 deferral period finishes, if the economy doesn’t improve.

He said Vancouver could be one of the hardest-hit places, along with Toronto and Alberta.

On Wednesday, the CMHC said home prices in B.C. could drop by 10 to 19 per cent  from pre-pandemic levels, slightly exceeding its forecast range for home prices across Canada of nine to 18 per cent.

It said home sales in B.C. could decline by 15 to 25 per cent and housing starts could drop from 44 to 64 per cent, compared to national forecasts of home sales dropping 19 to 29 per cent and housing starts dropping 50 to 75 per cent from pre-pandemic levels.

But one realtor said many in the real estate and construction industry are still “classically optimistic” and insist they are still seeing demand for housing in Metro Vancouver.

“I think everybody wants to keep the market healthy and churning, and when these reports come out, all they see is that it puts hesitation in buyers’ psyche,” said agent Steve Saretsky.

He said some are calling the CMHC predictions ridiculous. “I’m not sure if they are just saying that to me, or if they actually believe it.”

As for himself, Saretsky thinks it’s unusual for a cautious, crown corporation like CMHC, which oversees the entire mortgage market, to be overly negative in its forecasts unless it needed to be.

Immigration is often cited by the real estate industry as being a resilient, driving factor in major housing markets such as Vancouver, but CMHC chief economist Bob Dugan said that “with the (travel) restrictions on the movement of people, immigration is effectively slowed down dramatically.”

He said that, in the optimistic view, when travel restrictions are lifted, immigration can return, but in the pessimistic view that changes if there are “repeated waves (of infections) and further lock downs.”

Dugan said there isn’t a “lot of data yet on the impact of the coronavirus on the Canadian economy, but we do have some early indicators that the impacts are fairly significant.”

As for the spectre of mortgage deferrals becoming arrears, Dugan said statistics show over three million jobs have been lost, causing the unemployment rate to rise from 5.6 per cent in February to over 13 per cent in April.

“While employment decreased by three million people, the number of unemployed only increased by less than 1.3 million,” said Dugan. The gap “is created by the fact that many people who have lost their jobs have left the labour force and are not actively looking for work, and therefore are not counted as unemployed.”

Corrected for this, the unemployment rate in April would be 20 per cent.

“This doesn’t really count for the fact that many other people who remained employed either had to have their hours reduced and had much lower income than they would have had before the onset of the pandemic.”

© 2020 Postmedia Network Inc

OREA sets new ground rules for realtors as Ontario’s economy restarts

May 27th, 2020

Realtors continue to help clients feel safe

Ephraim Vecina
Mortgage Broker News

The Ontario Real Estate Association (OREA) has published its latest guidelines on home purchase transactions in the era of COVID-19.

“The health and safety of our realtors and their clients is OREA’s top priority during this pandemic,” said Sean Morrison, president of OREA. “As Ontario’s economy reopens, many Ontarians are looking to get back into the real estate market. Realtors are here to help make home buyers and sellers feel comfortable and safe while they work to find their dream home. OREA’s guidelines have been informed by up-to-date information from public health, best practices from the industry and experiences in jurisdictions across North America.”

OREA was among the earliest organizations to have petitioned a shift to mostly online transactions once the coronavirus pandemic took hold in late March.

“Now that the Ontario government has announced stage one of its plan to re-open the economy and with many consumers looking to get back into the market, it is important that realtors continue to help their clients feel safe and secure and keep the virus at bay,” OREA said in a statement this week.

The association is mandating its agents to “continue [using] virtual tools, conduct virtual open houses and virtual showings to the greatest extent possible,” despite the restarting of the economy. This includes maximizing the use of phone, email, and video communications with clients, as well as processing all documents via electronic channels.

Agents should also “thoroughly disinfect surfaces, leave doors open and keep lights on at all times during in-person showings,” OREA said. “When interacting with clients, maintain physical distancing and use personal protective equipment when distancing is not possible.”

Copyright © 2020 Key Media

Re/Max challenges CMHC home price projections

May 27th, 2020

Canadian real estate prices will remain stable

Ephraim Vecina
Canadian Real Estate Wealth

Housing industry players are opposing Canada Mortgage and Housing Corporation’s dire forecast of an 18% decline in home prices over the next 12 months, claiming that demand remains elevated and inventories continue to hover near record lows.

“Assuming that demand continues its current course, Canadian real estate prices will likely remain relatively stable or experience a single-digit price correction at worst,” RE/MAX said, adding that its agents are still reporting multiple offers on a regular basis.

“CMHC doesn’t seem to understand the sheer number of sellers that would have to accept this kind of price reduction, in order for average housing prices to plummet to this degree in such a short time span,” said Christopher Alexander, executive vice president and regional director with RE/MAX of Ontario Atlantic Canada. “Sellers simply won’t accept that kind of discount on their listings. A statement of this nature is panic-inducing and irresponsible.”

Government agencies should instead focus on how the housing markets – and the Canadian financial system as a whole – could weather the unprecedented impact of the coronavirus, according to the C.D. Howe Institute.

“Ottawa and the provinces need to recommit to fiscal and monetary anchors in light of the unprecedented stimulus response provided by all levels of government and the Bank of Canada throughout the COVID-19 crisis,” C.D. Howe said. “Canada is emerging from the first wave of the pandemic with very high public and private debt loads and is increasingly dependent on domestic and foreign investors to finance them. With the loss of Canada’s fiscal anchor, maintaining investor confidence so that public and private debt can be carried at a reasonable cost is essential.”

Copyright © 2020 Key Media Pty Ltd

Nanos – Consumer confidence in housing market still low

May 27th, 2020

Nanos Canadian Confidence Index

Ephraim Vecina
Canadian Real Estate Wealth

While Canadian consumer confidence is steadily recovering, the same cannot be said about the public’s views towards the housing market, according to the latest Bloomberg Nanos Canadian Confidence Index.

Polling found that 48.54% of respondents are anticipating a decline in home prices within the next few months – a level approximately three times above the average for this metric, Nanos Research said.

“Even as sentiment has improved around the economic outlook and personal finances, expectations around real estate are weakening,” Nanos said.

The overall confidence index went up for the fourth consecutive week, reaching 39.3.

“While the index remains near its worst-ever readings recorded last month, the rise in confidence in recent weeks suggests negative sentiment may be finding a floor amid talk of reopening the economy,” Nanos said. “Regionally, the gains in sentiment have been mostly in Western Canada, aided by a recent rebound in oil prices and relatively fewer coronavirus cases.”

Overall confidence remained at near-record lows in Ontario and Quebec, however.

Sentiments toward personal finances over the past year have soured to 36.7%, from 42.3% last month.

There was less pessimism towards the economy, although the overall level was still quite high. Around 73% of respondents said that the economy will worsen within half a year, down from 80% last month.

Copyright © 2020 Key Media Pty Ltd

Heritage home spurs bidding war amid pandemic real estate slump

May 27th, 2020

Bidding war erupts for heritage home during the pandemic

John Mackie
The Province

Real estate listings, and sales, have plunged during the COVID-19 crisis. But some properties are still selling.

Realtor David Richardson recently listed a handsome heritage home at 2120 East Pender for $1.588 million. Open houses have been nixed during the crisis, so his office set up private viewings by appointment on April 25 and 26.

So many people wanted to see it they had to extend the viewings for two days. They received 14 offers, and the buzz in the real estate industry is that the house sold for $1.928 million, $340,000 above the asking price.

Richardson wouldn’t confirm the price because the deal hasn’t closed yet. But he said there was a lot of action.

“We sent out 8,000 flyers (for the listing, noting it was) by appointment only,” said Richardson. “We lined them up every 20 minutes, and it took four days to show 75 people.”

The house was built in 1906, when its neighbourhood (Grandview) was vying to be one of Vancouver’s elite areas.

It’s big (four bedrooms, 2,500 square feet) and is brimming with character, with a turret on the outside, big open spaces on the main floor and lots of old growth wood and stained glass. It’s also on a large lot, 50 by 66 feet.

In short it’s the kind of home you might find in parts of Kitsilano or the West End. But you’d have to pay much more for a house like this on the west side, so Richardson said many of the people looking were west siders looking east.

“There’s a 20 per cent price difference (between the west and east sides),” said Richardson, who usually sells west side properties. “On a $2 million house, that’s $400,000.”

Richardson thinks one of the reasons the house attracted so much attention was a lack of listings during the pandemic.

“Normally a guy like me carries 12 to 15 listings at this time of year. I’m carrying one or two, and they’re being snapped up right away.

Realtor Les Twarog said things have been slow.

“The real estate board normally has 120 sales a day, and we’re doing about 40 or 50 sales a day,” he said.

But things are starting to pick up: Twarog has listed eight properties in the last couple of weeks.

“I listed a property on Kingsway and Boundary, $350,000, and I got eight calls in two days on it,” said Twarog. “I have another property I listed in Victoria yesterday at five o’clock, and I got 15 calls. The price is $500,000.”

Twarog said the two key factors in selling seem to be “a lack of inventory and the price point.”

“Things are happening, but most sales are under $1.2 million,” he said. “Five hundred, six hundred, seven hundred thousand, those are the hot price points.”

On Vancouver’s west side, there were 421 detached houses for sale in April, but only 37 sales, which is down from 699 listings and 64 sales in April, 2019. In east Vancouver, there were 349 detached house listings and 49 sales, down from 664 listings and 66 sales in April, 2019.

There were 647 condos and townhomes listed on the west side in April, and 78 sales, down from 977 listings and 137 sales a year ago. Fifty-seven of the 78 sales were for $1 million or less.

On the east side, there were 386 condos and townhomes listed and 67 sales, down from 583 listings and 141 sales last April. Thirty-three of the 67 sales were for condos $600,000 and under.

Selling a home is a bit different during the COVID crisis. Realtors have been using online tools like Zoom, Google Meet and Instagram to try and show listings.

To see 2120 East Pender, you had to book an appointment in advance, and not be late.

“Each appointment was individually booked at a time,” said Sarah Starling, who works with Richardson.

“So we had 11, 11:20, 11:40, 20 minute intervals. Everyone was required to wear a mask and gloves, and we provided booties. So everybody had to go with mask, gloves, booties, one group at a time.”

© 2020 Postmedia Network Inc

Stress test 2.0? What a 10% minimum down payment requirement would mean for Canadian buyers

May 25th, 2020

A 10 percent minimum down payment would have a chilling effect on business

Ephraim Vecina
Mortgage Broker News

Canadian Mortgage and Housing Corporation CEO Evan Siddall’s recent address to the Standing Committee on Finance contained a plethora of negative projections, from housing prices falling by 18 percent to one-fifth of all Canadian mortgages being in arrears by September. But it was his comments around the advantages of making 10 percent down payments and CMHC’s attempts to limit demand that have the industry wondering if an increase in the minimum down payment requirement may be in the cards.

As Siddall made his case for the approaching “deferral cliff”, a scenario where unemployed homeowners who have deferred their mortgage payments are asked to start making them again despite not returning to work, he shared with parliamentarians two key pieces of data that associate five percent down payments with increased risk.

The first, a chart that tracks the percentage of loans in deferral by their loan-to-value ratios, showed that 69 percent of the mortgages currently in deferral fall into the 90-95 percent LTV category. The implication seems to be that if there were fewer borrowers putting down five percent, the deferral cliff Siddall described might be less towering.

Siddall singled out first-timers again when he discussed the potential losses they could face if housing prices fall by 10 percent.

“Unless we act, a first-time homebuyer purchasing a $300,000 home with a 5 per cent down payment stands to lose over $45,000 on their $15,000 investment if prices fall by 10 per cent,” Siddall’s statement read. “In comparison, a 10 per cent down payment offers more of a cushion against possible losses.”

Because CMHC will be on the hook for any insurance claims triggered by failing mortgages, Siddall also said the Corporation is evaluating its underwriting policies.

“So if housing affordability is our aim, as surely it must be, then there must be a limit to the demand we help to create, especially when supply isn’t keeping up,” he said.

That’s the same logic that gave Canada its mortgage stress test. Many brokers are worried that a 10 percent minimum down payment would have a similarly chilling effect on business.

“I think it would be a comparison you could draw a lot of parallels to,” says Anthony Venuto of Centum Intouch Mortgage Solutions.

As with the stress test, Venuto feels that any desire for a doubling of the down payment requirement will be driven by the risk associated with lending in Canada’s most expensive markets – Toronto, Vancouver, Montreal, etc. – even though most, if not all, properties in those cities sell for over $500,000, making them ineligible for five percent down payments. It will be the smaller, softer, far more numerous markets where consumers will see their spending power evaporate.

“What about the rest of Canada?” he wonders.

Impact on brokers
Chris Kolinski operates for iSask Mortgage Brokers in Saskatoon. The Bridge City’s real estate market has been soft as warm cheese for the past five years. With homes there appreciating so slowly, buyers often opt for putting five percent down.

“I’d say about 80 percent of the purchases I do are five percent down purchases,” Kolinski says. “It actually comprises a big chunk of the business I do.”

Kolinski is in regular contact with brokers in Alberta and Manitoba. He says minimum down payment deals are a common occurrence.

“If this was to happen, I anticipate a big hit to homebuyers in the prairie provinces for sure,” he says.

John Vo of Spicer Vo Mortgage in Halifax, another market where buyers are regularly able to purchase homes will five percent down, understands the desire of insurers and lenders to protect their assets by requiring higher down payments. But it’s an odd move for institutions that require a high volume of home purchases to keep the wheels spinning and the margins as high as possible.

“They’ll have more quality mortgage holders,” Vo says, but far fewer overall.

With down payments being one of the biggest challenges facing homebuyers, Vo says brokers will be expected to work much harder for their clients if the down payment requirement doubles. It will require a delicate balance: Brokers will have to set hard savings guidelines for their clients if they hope to qualify, but buyers frustrated by their situations may decide to switch brokers if they’re constantly being told something they don’t want to hear.

“We’re going to have to become even more firm with our customers in saying, ‘This is your plan. You really need to stick to it,’” he says.

For Kolinski, an increase in the required down payment is a challenge he’s ready for.

“I’ll adjust the same way I did when they introduced the stress test back in 2016,” he says. “It was a huge panic for me when it happened. But ultimately, it comes down to us as brokers being able to adapt to the market.”

Few in the industry seem to think the change is imminent. Either way, the discussion around down payment levels has shone a harsh light on the anxiety-ridden situation facing first-time buyers.

“We’re hearing more and more that home ownership isn’t a right, it’s a privilege,” says Verico COO Mark Squire. “You feel for those first-time buyers. You’re going to see more pressure on the bank of mom and dad to help out.”

Copyright © 2020 Key Media

Expect rapid post-pandemic recovery – BoC’s Poloz

May 25th, 2020

Quick recover expected post pademic

Ephraim Vecina
Mortgage Broker News

Despite multiple headwinds and the continuous ravages of COVID-19, Canadian market activity and purchasing power will be able to recover quickly after the outbreak eases, according to outgoing Bank of Canada Governor Stephen Poloz.

“We have to be able to manage the risks around those things, so I’m not going to dismiss [the worst scenarios],” Poloz told BNN Bloomberg. “But, me personally, I do think on balance what I’m hearing, the flow that I’m hearing, is a little too dire, a little bit overblown.”

In the greater scheme of things, the coronavirus will not be a fatal roadblock, Poloz said. While the national economy is still on track to decline at least 15% this year, “you should see a very rapid return to production” once the economy restarts in late 2020, he said. “I’m relatively optimistic, what I find, compared with what the talk is.”

These predictions dovetailed with other observers’ forecasts of speedy post-pandemic recovery across the board, pointing at the Canadian financial system’s robust fundamentals.

However, the pace of this recovery will depend on homeowners not selling their assets, according to TD Economics.

“Absolutely key to our forecasts is the assumption that listings mirror sales by dropping substantially in the near term and recovering gradually thereafter,” said TD economist Rishi Sondhi. “This puts a floor on prices and sustains relatively tight supply-demand balances across most markets, allowing for the resumption of positive price growth as provincial economies are re-opened.”

Copyright © 2020 Key Media

Who will buy Vancouver housing in a time of COVID-19?

May 23rd, 2020

Metro real estate in for a wake-up call

Douglas Todd
The Vancouver Sun

More condominiums and houses are under construction in Metro Vancouver than ever before.

But who is going to buy them — let alone live in them — in an era mutated by COVID-19? Who will come forward when a global lockdown has pummelled the three key factors that fuel housing demand in Canada?

A record-breaking 44,000 “homes” are being built across Metro Vancouver. Almost 37,000 are condominiums or apartments. Planned years in advance to serve a once-fiery market, their construction has not been stopped by lockdown measures.

Judging by the trend of the last decade, developers of new Metro properties would expect about four in 10 of their dwellings to be snapped up by people who don’t actually live in them — so-called investor-owners, who leave the “homes” vacant or rent them out. (The real-estate market is similarly vulnerable in Toronto, where a record 73,000 units are under construction.)

But who are these houses and condominiums to be sold to at a time when the pandemic is causing double-digit unemployment, has pushed household debt and default into uncharted territory and thrown nerve-wracking unpredictability into population-growth forecasts based mostly on offshore in-migration?

A record 44,000 housing units are being built in Metro Vancouver, plus another 73,000 in Greater Toronto. Source: CMHC / Steve Saretsky

Metro Vancouver and Toronto are not alone, especially among desirable cities, in seeing their real-estate foundations cracked by the novel coronavirus, which has already caused the volume of sales to plummet.

Prices are set to be next. Various analysts have forecast housing values in Great Britain, Australia and the United States to drop by 10 to 20 per cent over the next year or two.

Predictions about the future of Canada’s housing prices are all over the proverbial map, to an almost comical degree (although few are laughing). Stephen Punwasi, of Better Dwelling, has compiled the wildly diverging Canadian housing forecasts of a dozen big-time analysts.

They range from TD Canada Trust and Scotiabank over-optimistically prophesying, at least for public consumption, that prices will rise six to 12 per cent over the next two years. That contrasts with credit agencies such as Moody’s and DBRS Morningstar more quietly predicting they will drop 10 to 30 per cent. The Canada Mortgage and Housing Corporation (CHMC), for its part, is looking at declines of nine to 18 per cent.

Meanwhile, the Canadian Real Estate Association has simply decided to not make its usual quarterly prediction. That leaves Punwasi musing: “CREA’s mom must have told them if they can’t say anything nice, don’t say anything at all.”

Right now, in the havoc-filled short term, it’s prudent to take the forecasts of self-interested mortgage-holding banks far less seriously than the more impartial credit and housing agencies. Their predicted price drops could hurt over-leveraged owner-investors, but end up being good news for working people who have withstood COVID-19 and might be able to buy a first home or move into something better suited to their needs.

It’s grim out there, though. Virtually no one is blind to the first COVID-19 factor set to hammer prices: That it has cost more than three million Canadians their jobs, at least temporarily. The second crisis, of growing household debt, is also clear: CMHC president Evan Siddall said this week that 20 per cent of Canadian mortgages could go into arrears.

When it comes to the third COVID-19 factor threatening housing sales, only a few industry specialists talk about how migration patterns, which are changing dramatically because of the pandemic, will hit housing demand across Canada and especially Toronto and Metro Vancouver (the latter with a population of 2.6 million).

More than four out of five people who have moved into Metro Vancouver (and Toronto) in recent years are foreign-born. Many are immigrants, but an unusually large portion — 35 per cent — are non-permanent residents, such as international students, guest workers and refugees, says B.C. housing analyst Steve Saretsky.

Not only have COVID-19 precautions virtually shut Canada’s borders to newcomers, they’ve led to many of the more than one million international students and guest workers in Canada (about 180,000 in Metro Vancouver) returning to their homelands. That’s hitting housing, especially the rental markets of Vancouver and Toronto, which have the highest immigration rates per capita in North America.

No province in Canada relies more than B.C. on in-migration to expand its population, which creates more demand for housing. Citing data from Capital Economics, Saretsky wrote in his April report: “In B.C. we are particularly vulnerable to a reduction of migration flows. Net immigration was 14 times as large as the net natural increase (ie. net births less deaths) — versus fives times for Canada as a whole.” (See chart.)

One politician paying attention to these many ways COVID-19 is affecting the region’s mammoth housing industry is Vancouver city councillor Colleen Hardwick.

The daughter of the late University of B.C. geographer Walter Hardwick (who also served on Vancouver council) has a motion asking why the city has a housing strategy focused on building far more units that it actually needs.

Hardwick’s motion — set to be debated next week, with supportive presentations by several B.C. housing scholars — says that in light of “post-pandemic realities,” City of Vancouver politicians and staff should be re-examining why it is targeting to build 72,000 new dwellings over the next decade.

The city of Vancouver, population 680,000, has been growing by one per cent a year mainly because of offshore migration, says Hardwick’s motion. At that growth rate, the city really needs only 30,000 new housing units over the next 10 years.

And given that “there’s no question COVID-19 is going to have a major impact on housing” and migration flows, Hardwick said in an interview she wonders why so many officials have been creating a “scarcity narrative” to justify increased zoning densities and intense surges in housing supply.

In order to plan housing effectively, Hardwick is urging city staff to provide better data and a more credible construction target, one that will meet the needs of ordinary people who live and work in the region, not necessarily serve luxury buyers, many of whom spend foreign-sourced capital.

Along with some other savvy municipal politicians in Metro Vancouver’s suburbs, Hardwick is aiming for a more healthy way forward in a region where many developers have for years been erecting dwellings largely to satisfy the desires of owner-investors and speculators.

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