Growth in BC’s new housing investment far outpacing Canadian average, which is dragged down by declines in other provinces

Joannah Connolly
Other

BC residential construction investment was up 13.3 per cent year over year to nearly $643 million in March, according to Statistics Canada data released May 21.

The province’s growth was only enough to give it the sixth highest investment increase in Canada, after Yukon, Northwest Territories, Prince Edward Island, Alberta and Nova Scotia, which all registered higher growth in new housing investment.

However, as a national average, the growth in new housing investment was up a more modest 4.4 per cent year over year, due to significant declines in some provinces and territories. March’s $3.5 billion investment also represented the nation’s sixth consecutive month-over-month decline.

Across Canada, row houses were the biggest driver of growth, rising 7.7 per cent compared with last March, while single-family homes increased by just 1.5 per cent.

In BC, it was again duplexes that saw the biggest annual increase in investment, up 29 per cent compared with March 2014, followed by row homes, which rose 18.8 per cent year over year.

Single-family home construction investment in the province was up 18.4 per cent, and the growth in condo investment picked up to rise 4.2 per cent year over year after a sluggish February.

BC’s figures were also up 2.4 per cent month over month overall, and increased for three out of five property types, led by row homes. Surprisingly, having been the star of the show in the monthly figures for the past few months, investment in duplex construction fell 1.7 per cent since February.

To see Statistics Canada’s interactive chart, click here.

© 2015 Real Estate Weekly

Justin da Rosa
Other

Complaining about one bank’s Realtor referral program goes deeper than just cutting into potential broker business, according to one industry player.

“It’s a free economy and you can’t stop people from doing business; the problem is innocent homebuyers – often first time homebuyers – are being advised to go to the bank,” Ad Lakhanpal of Mortgage Alliance told MortgageBrokerNews.ca. “Bank penalties are never explained to clients and you need to be a chartered accountant to figure these penalties out. The issue here is consumer protection.

” One of the Big Six has come under fire, once again, for an email campaign targeting Realtors for client referrals.

That email, which was originally sent to B.C.-based real estate agents, was obtained by MortgageBrokerNews.ca last week.

“From the standpoint of supporting someone and then finding out that they’re going over your head or trying to cut into your business it just doesn’t make sense,” Mark Fidgett of Verico NotaPennyDown, told MortgageBrokerNews.ca at the time. “I hope as an industry we can respond as a group because one-offs just don’t do it; they won’t care.”

And several brokers are frustrated that the broker channel bank is actively pursuing leads and undercutting broker business.

“My office stopped using (that lender) a few years ago when their road reps figured out a way to manipulate their system and offered discounting far beyond what was available anywhere and high referral fees to Realtors,” George Christopoulos of The Mortgage Centre wrote on MortgageBrokerNews.ca. “This is a free market but why do business with a company that clearly does not treat the brokers on a level playing field?”

Copyright © 2015 Key Media Pty Ltd

Buying and selling homes is big business in B.C.

Mike Klassen
Van. Courier

If you have noticed a persistent ringing in your ears lately, take heart as we all are hearing it. It is the sound of government cash registers as they rake in revenue from Vancouver’s record-breaking real estate market.

What you will certainly not hear above the din is any politician saying they will make any changes that could risk driving down housing prices. That is because they are too dependent on the dollars it brings into government coffers.

In you still think that an elected official will come to the rescue of those trying to buy into Vancouver’s hyper-inflated single-family housing market, please note the following.

There are 757 million reasons why the B.C. government will not intervene. That figure represents the total the amount in dollars the government raised in property transfer taxes in the last fiscal year. Buying and selling homes is big business in B.C., and that figure could go as high as $1 billion if 2015 sales projections hold.

There are nearly 1.9 billion reasons why Mayor Gregor Robertson will keep his mouth zipped over double-digit property assessment increases across our city. The City of Vancouver issued $1.88-billion worth of residential permits in 2014. Overall this represents a 77 per cent increase over 2008.

The mayor is consistent in his view that he thinks the city is cash-starved — so why would he dare to turn off the flow of revenue home-building provides? One might surmise then that Robertson’s talk about housing affordability is as empty as the homes he wants citizens to report on a snitch website.

Then there is the thorny politics of home prices. If you are in the market already as a homeowner, chances are you are praying that your real estate investment will continue to appreciate. Many of us lament the loss of affordability, but none of us are likely to respond by selling to the lowest bidder.

Furthermore, homeowners are more likely to vote, and if their home price drops because of political intervention, you can kiss their support goodbye at election time.

Some assert that as long as home prices continue to rise, politicians at city hall have job security. They point to the last time Vancouver experienced any prolonged property price depreciation in 1999 to 2002. It was during that time that the incumbent NPA council was routed by Larry Campbell and COPE.

Rest assured that our mayor and council understand there are political consequences for putting the squeeze on home price values.

This does not mean elected officials are impervious to pressure from citizens. Tens of thousands have already signed a petition at Change.org demanding our politicians restrict foreign investment in our real estate market. They cite similar policies tried in Australia and England to cool — albeit unsuccessfully — spiking real estate prices overseas.

Opposition politicians have naturally seized the issue, although one has to wonder if they would do the same in government. An NDP Member of Parliament is demanding that government provide resources to study the impact of foreign investment in housing.

The terms of reference for this kind of plan alone would be daunting. There are approximately 4,000 municipalities in Canada, and most of them would love to have Vancouver’s revenue growth statistics.

The question is even more basic for the federal government. Why would you use limited tax dollars on a project whose end-goal is to deflate tax revenue from the real estate market?

It is debatable if any plan to curb foreign investment would even work. An Australian study determined that domestic buyers — taking advantage of low interest rates — have overwhelmingly driven up real estate prices in that country.

Do not despair, however, because our politicians can do something about housing affordability: allow more of it to be built.

The laws of supply and demand are no different here in B.C. than anywhere else. We have seen since the increase of development of attached housing that prices of condominiums have levelled off. This is happening in spite of some well-documented involvement of foreign buyers.

Barring a significant increase in interest rates, however, Vancouver’s limited supply of detached homes will continue to appreciate in value. That means we will continue to hear another sound.

The ringing of alarm bells over declining affordability.

© 2015 Vancouver Courier

Olivia D’Orazio
Other

Canada’s finance minister says the country’s real estate market has avoided the so-called bubble, with many markets already experiencing a soft landing.

Speaking at a private event on Wednesday, Finance Minister Joe Oliver said the government isn’t expected to change any guidelines in an effort to cool off the few hot markets remaining.

“We do not see the need for major changes at this time,” Oliver said at the event, according to Bloomberg News.

“We will continue to monitor the market and make adjustments, if needed, although none are being actively considered right now.”

The Canadian government has changed lending guidelines four times since 2008, when real estate sales and prices started to rise.

While those increases are still being realized in many markets – specifically Toronto, where April home sales rose 17 per cent from the year-ago period, and in Vancouver, where sales were up 37.7 per cent year-over-year in April. Still, Oliver said some regions are already seeing slowdown.

Regardless, analysts both in Canada and internationally have called the market overvalued. Most recently, ratings agency Fitch called the market overvalued by 25 per cent, while other firms have published overvaluation figures between 10 and 60 per cent.

Oliver isn’t alone in his predictions. Speaking to the House of Commons Standing Committee on Finance, Stephen Poloz, the governor of the Bank of Canada, also suggested the country is not in danger of a hard landing.

“There are many other characteristics of a bubble situation that are not present,” said Stephen Poloz, the governor of the Bank of Canada, pointing to  highly speculative behaviour – for instance, people buying multiple properties with the sole intent of selling them at a profit in the future.

Instead, the trend seems to be that first-timer buyers – more so than would-be investors – are taking advantage of low interest rates.

Oliver said those interest rates, paired with economic growth in major centres, will continue to buoy the market, while hyperactive cities like Toronto and Vancouver will continue on their own trajectories.

Copyright © 2015 Key Media Pty Ltd

 

Suze
Other

This is a question coming up from our real estate coaching clients a lot in both Toronto and Vancouver so I thought we would address it for everyone.

Offer too little and poof – the house is sold to someone else. Offer too much and your client is left with this feeling of dread they overpaid. It’s a tough one to win.

It’s difficult to establish the market value because if there are several offers then there is more demand than supply and basic economics tell us this will drive prices up. How much and how fast depends on a large number of variables including the supply and demand ratio, the desperation of the other bidders, the uniqueness of the property, the sales ability of the other real estate agents, the macroeconomic picture and many other nuanced influencers.

Over the years, many real estate trainers have tried to establish a formula that could help their clients win more multiple offers. None of them have ever worked because they are tied to the asking price and the asking price is merely a strategic anchor for the seller and is meant to advantage the seller.

To win in multiple offers, you need to ignore the asking price. And, you need to get your client to ignore the asking price. Tell them to imagine the property is listed for $1. It’s an auction and you need to establish what the top price they will pay is and feel good about the purchase. You become a real estate coach to your client.

The next step is to look at the definition of market value with your client.

One could argue multiple offers create conditions not requisite to a fair sale and the price may be affected by undue influence. But if multiple offers are common in your marketplace then the definition stands. Albeit – it’s a warning to tread carefully for sure.

Typically when we estimate the value of a home, we look back to what similar properties sold for in the recent past. While this information is still valuable, when the demand surges much higher than the supply, we need to give this information less weight and we need to gather information on other important factors. What is the situation of the other bidders?   How aggressive are the other agents? What will their perceived value of the property be? What is the likelihood of other similar properties coming on the market in the near future? How unique is the property?

In a strong sellers’ market, the value is what a buyer will pay. You need to get excellent at estimating what the other bidders will bid if you want to get your client a great home.

Being excellent at selling real estate involves thousands of important nuances and this is why top performing agents know real estate coaching is highly valuable. If you want to be a successful real estate agent, coaching is not a luxury – it’s essential.

Coyright © 2015 The Nature of Real Estate

Other

Download Document

Jennifer Paterson
Other

The litany of sins committed by so-called “serial” tenants continue to hurt landlords and still those offenders get away with it.

“The ‘serial’ abusers – tenants who knowingly victimize one landlord and then go on to another and another – are of particular concern,” said David Hutniak of LandlordBC.

These types of tenants are pointed to as yet another example of the “ineffectiveness” of the administrative penalties introduced by the Residential Tenancy Branch last week. They were quickly criticized by West Vancouver MLA Spencer Chandra Herbert.

“I’ve had small landlords say to me that they have had tenants who know they can get away with it, because they’ve been getting away with it for so long and haven’t had to pay,” he added.

“The cost of going to the courts, getting an order and finding the tenants is prohibitive compared to the amount of money they’ve lost, so landlords think they might as well give up.”

A CREW reader and investor, Karyn wrote in the CREW Forum that she has lost at least three months’ rent due to negligent tenants writing bad cheques, another calling card of the “serial” tenant.

“There absolutely needs to be an avenue to [hold money] in garnsihee at the tenants’ cost and prevent them from renting again until all previous rent has been paid,” she added.

Tenants in Joe Rich, near Kelowna, B.C., recently trashed their rental house before moving onto the next one, and also left behind some dynamite. “It’s just so scary and hard to get them out once they’re in,” the landlord told Global News. “It’s a huge warning for anybody who is renting their property.”

The worst offender for Kathy Berner, owner of Regency Management & Real Estate in Regina, was a tenant who punched holes in every room, ripped off the cupboard doors and stealing the washer/dryer after he was evicted for failing to pay rent.

The same tenant is now set up in another rental after providing fake references to his new landlord. “He got away with theft, damages and stealing rent, and the police did nothing,” added Berner. “It’s very disappointing and frustrating that landlords get no support.”

Copyright © 2015 Key Media Pty Ltd

Joannah Connolly
Other

Despite the seemingly unstoppable rise in resale house prices in Metro Vancouver, the price of a newly built home in the city continued to drop in January this year, according to Statistics Canada figures released March 12.

New homes in the area fell 0.1 per cent compared with December 2014 and 0.6 per cent year over year, continuing the trend of recent months.

The New Housing Price Index also fell 0.6 per cent year over year and 0.1 per cent month over month across the whole of BC.

Victoria saw Canada’s biggest new home price decrease in January, dropping 1.5 per cent compared with January last year, as well as 0.5 per cent since December.

Vancouver and Victoria were two of only eight metropolitan regions to report decreases in new home prices in January, out of a total of 21 areas surveyed.

The index combines both home and land values. As in previous months, the above decreases in value were entirely attributed to developers reporting a drop in negotiated home prices, with land values remaining unchanged for several months.

Across Canada, the index increased 1.4 per cent year over year but fell 0.1 per cent month over month.

Calgary again reported the country’s biggest jump in new home prices in January, rising 5.1 per cent year over year.

For the full report and a link to Statistics Canada’s interactive chart, click here.

© 2015 Real Estate Weekly

Jamie Henry
Other

The commercial real estate market in Ottawa is improving, according to a new report from Colliers International.

Its latest transactional report, covering Q1 2015, shows that there was a 12 per cent increase in sales volume year-over-year.

Industrial assets achieved a 120 per cent rise in the number of sales and overall transactional volume was up 134 per cent. However, the total dollar value of all transactions was lower.

“The Ottawa commercial real estate market continues to be an attractive investment location for local and international investors,” says Collier’s Oliver Tighe. “There continues to be concern regarding large-scale retail assets, which in turn tempers demand for assets with these vacancies.

“The most challenging sites will be those in which Target was the sole anchor and where major competitors, such as Walmart and Loblaws, are already operating nearby.”

Colliers also noted that the condo market continues to struggle, although some developers have turned their attention to purpose-built rental units that are showing some success.

Overall, the firm’s outlook for Ottawa in 2015 is that it will improve on 2014 figures. 

Copyright © 2015 Key Media Pty Ltd

Jamie Henry
Other

Kennedy Stewart, the MP for Burnaby, has once again called for a housing study to be conducted by government agencies and for these to include data on foreign ownership.

Stewart says that CMHC and Statistics Canada need to do the work as cities don’t have the time and resources to do so.

Speaking to Burnaby Now he said: “It could be that there’s a lot of foreign investment, and we get the sense that seems to be in Burnaby. We don’t really know the extent of whether this is happening or not.”

The MP tabled a motion last year calling for similar action but it is unlikely that it will be debated before the election. 

Copyright © 2015 Key Media Pty Ltd