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Not since the 1970s has Vancouver seen the surge in investment in purpose-built rental apartment buildings.

Back then, it was the federal government’s “MURB” program (Multiple Unit Residential Buildings) that encouraged development in the sector by allowing investors in new apartment buildings to claim their annual depreciation against other income for tax purposes.

Today, it is the municipal government – the City of Vancouver – that has  created incentives for purpose-built rental buildings through its rezoning policies. For instance, in the West End and East Vancouver, the City will relax its parking stall ratios and provide additional density, to encourage development of purpose-built rental. These incentives, combined with rising rents, historically low vacancy rates, a low interest rate environment and an aging building stock are stimulating a boom in purpose-built rental properties in Vancouver.

Since 2010, when the City first launched its incentive program under the banner of “STIR” (subsequently replaced by “Rental 100”), the City has approved 3,783 units of new market rental housing.

All things being equal, the profit margin for condominium development will supersede the capitalized value of income that purpose-built rental properties create. However, as the City of Vancouver demonstrates, it only takes minor changes in rezoning policy to tip the scales in favour of building rental.

Copyright © 2016 Colliers International Canada

Steve Randall
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Home sales in British Columbia hit a new record in December. The BC Real Estate Association reports that there were 6,590 homes were sold in the month through its MLS system, up almost 30 per cent year-over-year while total dollar volume hit a record $4.62 billion, an increase of 55.4 per cent from the previous December.

“The 2015 housing market finished in dramatic fashion, with record demand for the month of December,” said Cameron Muir, BCREA Chief Economist. “BC home sales breeched the 100,000 unit threshold in 2015, and it was only the third time on record that this high watermark was achieved.”

The average price in the province climbed above $700,000 for the first time in December, up 19.7 per cent from a year earlier.

Total dollar volume for 2015 was up almost 37 per cent from 2014 at $65.3 billion

Copyright © 2016 Key Media Pty Ltd

Justin da Rosa
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It’s a red-hot market – and one that is incredibly lucrative. Are there any secrets to success?

In short – no; at least according to this one expert.

“It is not easy to break into the luxury market; the main factors are hard-work (and having a) sincere attitude (and) creditable personality,” Anita Mui, an agent with Century 21, told REP. “And more importantly a high society personal connections is definitely an advantage and asset.”

“I feel that once you are doing well in the luxury market, you will have a good reputation and your position in the trade will be highly recognized.”

Mui has been working the high-end real estate market for five years and has gained a reputation for her quick turnaround times. She recently sold a Bridal Path property in a single day for a whopping $6.38 million.

The Canadian luxury market has earned quite a bit of media coverage lately, due to boom it is currently experiencing.

As REP previously reported, Sotheby’s International Realty Canada found 11,112 luxury homes – worth more than $1 million – were reported in the Greater Toronto Area last year. That represents an increase of 48% year-over-year.

And agents on the west coast fared just as well.

Vancouver saw 4,578 homes over $1 million changing hands in 2015 – a 46% increase over 2014’s mark.

Further, the study found that the greatest boom was for housing costing more than $4 million. Toronto saw an 71% increase in homes in that category, and Vancouver sales grew by 67%.

The reason for the boom, according to Mui, is due to a number of factors.

“The reason for the massive increase in the sales of luxury market last year were attributable the marked devaluation of the canadian dollar; low interest rate and stagnant stock market; political unrest and instability in many parts of the world; (and the fact that) Canada enjoys a vibrant and resilient country and (is) therefore a safe haven for the wealthy,” Mui said.

Copyright © 2016 Key Media Pty Ltd

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REBGV
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In a year when the number of homes listed for sale was below historical averages, actual home sales in Metro Vancouver set a new record.

The Real Estate Board of Greater Vancouver (REBGV) reports that 2015 home sales were the highest annual total in REBGV history. This was powered early in the year by four straight months with more than 4,000 sales a month from March to June, another first for REBGV.

Sales of detached, attached and apartment properties in 2015 reached 42,326, a 27.8 per cent increase from the 33,116 sales recorded in 2014, and a 48.4 per cent increase over the 28,524 residential sales in 2013.

The total number of homes listed for sale on the MLS® in 2015 ranked fifth in the last ten years, while the MLS® Home Price Index (HPI) saw double-digit year-over-year price increases.

The number of residential properties listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in 2015 reached 57,249. This is an increase of 2.1 per cent compared to the 56,066 properties listed in 2014 and an increase of 4.6 per cent compared to the 54,742 properties listed in 2013.

With sales-to-active-listings ratios above 25 per cent for 11 months in 2015, the Metro Vancouver market experienced seller’s market conditions for much of the year.

“Home buyers were active and motivated throughout 2015 despite the pressure on supply of homes on the market,” Darcy McLeod, REBGV president said. “Housing markets typically experience quieter periods within a calendar year, but that wasn’t the case in Metro Vancouver last year.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver ends the year at $760,900. This represents an 18.9 per cent increase compared to December 2014.

“We often hear economists say that seller’s market conditions put upward pressure on home prices,” McLeod said. “That was certainly the case in 2015, with price increases ranging from 14 to 24 per cent depending on property type.”

December summary

Residential property sales in Greater Vancouver totalled 2,827 in December 2015, an increase of 33.6 per cent from the 2,116 sales recorded in December 2014 and a 19.8 per cent decline compared to November 2015 when 3,524 home sales occurred.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 2,021 in December 2015. This represents a 7 per cent increase compared to the 1,888 units listed in December 2014 and a 40.4 per cent decline compared to November 2015 when 3,392 properties were listed.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 6,024, a 41.6 per cent decline compared to December 2014 and a 25.6 per cent decrease compared to November 2015.

Sales of detached properties in December 2015 reached 1,136, an increase of 36.4 per cent from the 833 detached sales recorded in December 2014. The benchmark price for detached properties increased 24.3 per cent from December 2014 to $1,248,600.

Sales of apartment properties reached 1,225 in December 2015, an increase of 34.3 per cent compared to the 912 sales in December 2014.The benchmark price of an apartment property increased 14 per cent from December 2014 to $436,200.

Attached property sales in December 2015 totalled 466, an increase of 25.6 per cent compared to the 371 sales in December 2014. The benchmark price of an attached unit increased 13.6 per cent from December 2014 to $543,700.

©2016 REBGV

Ephraim Vecina
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With the upcoming preparation and approval of its budget next month, the British Columbian government is set to tackle housing relief as a primary concern.

Premier Christy Clark said on Tuesday (January 12) that luxury or speculation taxes won’t be implemented in the government’s bid to moderate Vancouver’s surging housing market, which has put an increasing number of homes out of reach of a growing fraction of would-be owners.

Clark did not give further details, only saying that the measures would focus on providing relief for first-time buyers without devaluing the properties of current owners.

“We’re thinking of a whole range of things. You’ll see more of it as we get closer to the [Feb. 16] budget,” Clark told media in a press conference, as quoted by The Globe and Mail.

In an economy struggling with a weakening petro-currency and reduced purchasing power, affordability has become a more important consideration for buyers. While first-time buyers in B.C. are exempt from the property-purchase tax on homes worth less than $475,000, nearly one-thirds of homes in the region – especially in Vancouver – lie well beyond this price range.

Late last year, the government said that it was considering some adjustments to the current property-purchase tax thresholds, including revisions to the $475,000 exemption for first-time buyers.

“We are not interested in taking steps that will see a diminishment in people’s equity, the value of their homes, but we are interested in facilitating entry into the housing market by young families, young British Columbians,” Finance Minister Mike de Jong said last September.

Copyright © 2016 Key Media Pty Ltd

 

Ephraim Vecina
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The Canadian housing market is expected to grow at an average of 2.5 per cent this year, according to two new reports released on Wednesday (January 13). The figure represents a more moderate pace compared to that of previous years.

Top real estate franchiser Royal LePage predicted in its 2016 forecast that prices will increase by a maximum of 4.1 per cent across 53 markets nationwide, cooling from a vigorous 6.5 per cent annual growth over the past few years.

“While most of the country will continue to see house [price] appreciation in 2016, we expect that the pace of increases in Greater Vancouver and the Greater Toronto Area — where real estate appreciation has significantly outpaced wage growth — will settle to a more sustainable, single-digit price increase trajectory,” LePage president Phil Soper told the Financial Post.

Soper added that new mortgage requirements set to take effect on February 15, which would require at least 10 per cent downpayment on homes worth more than $500,000, should not be a cause for concern as the Canadian market still has room for growth.

Meanwhile, credit agency Fitch Ratings said it does not expect a price drop to take place within the year. The company projected a 2016 property value growth of approximately 2.5 per cent.

Fitch cited the possible impact of an emerging risk factor, however. “National prices [are] 20 per cent overvalued compared to growth in long-term economic fundamentals leaving markets exposed to downside risk,” the company stated.

In addition, Fitch warned about the growing rate of household debt in the country, which was at 165.5 per cent of disposable income as of the latest count. Such a disparity might place higher-quality properties out of reach of more and more Canadians in the coming months, the company said.

Copyright © 2016 Key Media Pty Ltd

 

Justin da Rosa
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The latest data confirms agents’ fears in one hard-hit market.

Housing in Calgary will be “weak,” according to the Calgary Real Estate Board which cites continued economic volatility as the reason.

“As we move into the second year of this environment, we expect to see additional housing supply pressure and further price declines,” CREB Chief Economist Ann-Marie Lurie said in a release. “Weakness in the energy sector is overshadowing all aspects of our economy and with more people looking for work and fewer opportunities; we could see some families making adjustments to their housing situation.”

Sales activity is expected to decline 2.2% to 18,416 units, according to the association. The average price is expected to decline by 3.44% to $438,652.

“Market intelligence really matters in today’s operating environment. Pricing trends have and will continue to vary depending on product type, price range and location,” CREB president Cliff Stevenson said. “Sellers in this market need to have a good understanding of activity within their specific niche of the market. This is where a real estate professionals can really help navigate market conditions and real estate options, which are always unique to each consumer.”

These predictions echo concerns from agents in the area.

“What can we expect next year in Alberta? That’s a good question; I wish I had a crystal ball,” George Bamber, broker/owner of Century 21 Bamber Realty, recently told REP. “I’d expect sales to be similar to 2015; I don’t see them being much more depressed, but I don’t see them returning to pre-2014 levels.”

Copyright © 2016 Key Media Pty Ltd

BCREA
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The British Columbia Real Estate Association (BCREA) reports that a record number of home sales were recorded in the province for the month of December. A total of 6,590 residential unit sales were recorded by the Multiple Listing Service® (MLS®) last month, up 29.8 per cent from the same month the previous year. Total sales dollar volume hit a record $4.62 billion for the month of December, up 55.4 per cent compared to the previous year.

The average MLS® residential price in the province climbed above the $700,000 threshold for the first time in BC last month, rising 19.7 from December 2014 to $700,943.

“The 2015 housing market finished in dramatic fashion, with record demand for the month of December,” said Cameron Muir, BCREA Chief Economist. “BC home sales breeched the 100,000 unit threshold in 2015, and it was only the third time on record that this high watermark was achieved.”

The combination of record home average home prices and near record annual unit sales prices propelled the dollar volume of MLS® residential to a record $65.3 billion in 2015, up nearly 37 per cent from the previous year. The average annual residential price reached a record $636,627 last year, up 12 per cent from 2014. A total of 102,517 residential unit sales were recorded, an increase of 22 per cent compared to 2014. A record 106,310 residential unit sales were recorded in 2005, while the only other year eclipsing 2015 were 2007 when 102,805 unit sales were recorded.

Copyright ©2016 BCREA