Archive for October, 2016

Foreigner buyers switch targets

Monday, October 31st, 2016

Justin da Rosa
Mortgage Broker News

Vancouver’s foreign buyer tax is encouraging those investors to look outside the lower mainland, according to one report.

Foreign investment is having a growing influence in Kelowna and the Okanagan Valley in general, according to a report by HM Commercial Group.

“The past 18 months have seen a significant increase in Asian commercial and winery property investment in the Okanagan valley, particularly in Kelowna which, according to StatsCan, is now the fastest growing metropolitan area in Canada with a 3.1% growth rate,” the commercial real estate firm said in its October report. “Kelowna has attracted a good deal of attention in the business media recently, including feature articles in BC Business Magazine and The Globe and Mail.

“Additionally,  very  low  cap  rates  in  the  Lower  Mainland,  compounded by the 15 per cent residential tax for foreign nationals, is driving Asian investment and development into Kelowna and the Okanagan Valley.”

Specifically, the firm said Asian investors are targeting commercial projects in the area, including; a $6.5 million site that has been approved for 161 hotels and 128 condos, the $10 million 300 acre Lake Okanagan Resort, and a $2.4 million downtown commercial building.

“Asian  investors  are  also  actively  pursuing  wineries  and  golf  courses  throughout  the  valley,  in  some  cases  due  to  the  prestige  they  offer.  Six  vineyards  and  wineries  have  been  brokered  by  Macdonald  Realty  Kelowna,” HM Commercial Group said. “There are numerous examples of large land parcels (often 50 acres+) being purchased, and because in some cases they include functional businesses, they also meet the criteria of the federal government’s immigration and foreign investment policies.

“Although  Cap  Rates  have  compressed  over  the  past  2  years, both foreign and domestic investors are flocking to Kelowna because the capitalization rates are much higher than in Vancouver.”

Copyright © 2016 Key Media Pty Ltd

Condos crack down on Airbnb

Monday, October 31st, 2016

Justin da Rosa
Canadian Real Estate Wealth

Condo managers are already cracking down on Airbnb rentals prior to the expected regulation in Toronto.

The city is currently reviewing the impact short-term rentals such as Airbnb have on Toronto real estate, with an eye on regulating that increasingly lucrative investment option.

It released a report earlier this about the growing influence of the home-sharing program and claimed it is currently researching key issues, consulting with key stakeholders and will examine options for regulation following the review period.

“Staff will examine potential options for regulating short-term rentals in Toronto, including a licensing system, updated zoning by-laws, additional tax requirements and other options,” the city said in the report. “To develop these options, staff will examine the issues identified through research and consultation and determine whether evidence suggests further regulations are required.

“Staff will examine the strengths and weaknesses of approaches in other jurisdictions and provide options for regulating short-term rentals in Toronto. The results of this work will be presented in a report to Executive Committee in 2017.”

However, even prior to regulation, at least one condo management firm is cracking down on Airbnb rentals.

Copyright © 2016 Key Media Pty Ltd

Advice for clients: Prepare for deal delays

Monday, October 31st, 2016

Justin da Rosa
REP

Lenders were caught off guard by recent mortgage rules changes, according to one professional who claims deals are being delayed.

“Every single lender is behind dealing with the changes and most of them got caught by surprise because there was no consultation,” mortgage broker John Panagakos said. “Big lag getting information, getting updates, and getting approvals. Lenders I deal with are dealing with it well.

“Right away I had clients that were trying to buy a house in the $650,000 range and today they put in an offer on a condo for half the price. It was because of the stress test. The only workaround is someone getting a co-signer.”

The industry was surprised by a number of mortgage rule changes that were announced in early October.

One of the changes was a tweak to qualifying rules for insured mortgages.

Effective October 17, all homeowners taking out a high-ratio insured mortgage are now required to qualify at the Bank of Canada posted rate. That requirement will be extended to low-ratio insured mortgages on November 30 – meaning an even larger pool of clients will be impact and, perhaps, qualify for less house than they originally planned for.

However, with that effective date for that change a month away, lenders will have enough time to prepare – which means delays won’t be as pronounced.

Copyright © 2016 Key Media Pty Ltd

Tower One at The City of Lougheed 9855 Austin Road Burnaby 500 homes in a 55 storey tower by Shape Properties

Saturday, October 29th, 2016

Huge City of Lougheed to rise on 40-acre-site in Burnaby

Michael Bernard
The Vancouver Sun

Project: The City of Lougheed

Project Address: 9855 Austin Road, Burnaby

Project Scope: A total of 500-plus one-, two- and three-bedroom homes contained in Tower One, a 55-storey concrete highrise sited in the community’s “first neighbourhood.” One of 23 towers on a 40-acre site at Lougheed Mall. An 18,000-square-foot amenities area on a raised podium will include activity rooms, fitness, lounge facilities. Located on two SkyTrain lines, there will be more than 300 shops, restaurants serving the neighbourhoods.

Prices: From $329,900 for one-bedroom homes starting at 550 square feet

Developer: Shape Properties Corp.

Architect: James K. M. Cheng Architects (master plan) GBL Architects (Tower One)

Interior Designer: Shape Living Interior Design

Sales centre: 9850 Austin Road, Burnaby

Centre hours: 10 a.m. — 6 p.m., daily

Sales phone: 604-328-7128

Website: www.thecityoflougheed.com

Occupancy: Late 2020

The City of Lougheed, a $7-billion plan to build what is purportedly the largest master-planned community in Canada, will feature up to 23 residential towers, public plazas and pocket parks in a 16-city block area and more than 300 stores in a reconceived Lougheed Mall.

Developer Shape Properties Corp. has already opened its three show homes for its planned 55-storey Tower One highrise building in an 18,000-square-foot presentation centre on Austin Road.

Architect James Cheng, whose firm is overseeing the award-winning master plan, says the challenge of such a large project is to make “a better city for people to move into, not just by increasing density”, but by building individual communities with amenities and services to which they can walk rather than drive.

“People will walk everywhere,” the architect said. “When you move to Lougheed, most of the time you won’t have to use your car. Everything is self-sufficient. You go downstairs and walk outside and you have everything. You can have your bowl of noodles or you can buy a wedding gown.”

A major asset for the City of Lougheed, he said, is that it already sits in the middle of a major transportation hub where two SkyTrain lines and a major bus loop meet, ensuring the master-planned development will thrive as a community.

“People are not just interested in buying into a single apartment building in the middle of nowhere,” Cheng said in an interview. “They like to know when they buy there, its easy to go the airport, to go downtown, to catch a show, to recreate, to be entertained, and also they want to be safe.”

 Cheng says without planning, “towers would be springing up willy-nilly everywhere.” Instead, his firm clustered the towers in seven “character precincts” or neighbourhoods, to which residents feel attached and identify, as they do in any city. “In Vancouver, if you live in Kitsilano, you know you live in Kitsilano, and you’re not worried about Dunbar or Kerrisdale.”

Separating the clusters of three and four towers will be pocket parks, public plazas with water features, and landscaped gardens, he said. One neighbourhood, called Creekside, will even have a revitalized creek brought to the surface after running underground through a culvert beneath Lougheed Mall’s parking lots. Another stretch, called the Grand Promenade, will be comparable to Paris’ Avenue des Champs-Elysees or Chicago’s Michigan Avenue with its extra wide sidewalks and shops.

At 40 acres, the City of Lougheed is one of the largest new master-planned communities in Canada, if not in North America, said Darren Kwiatkowski, Shape’s executive vice-president, development and design. The only other project of comparable size is one called the Hudson Yard project in New York, said Kwiatkowski.

Called a “super regional shopping centre,” City of Lougheed has attracted commitments from several major tenants to anchor 1.4 million square feet of retail space, including Walmart, Hudson’s Bay, London Drugs, Safeway, Sport Check and H & M, among others. Another one million square feet is designated for commercial office space.

The City of Lougheed will house some 10,000 residents, about double the New York development’s anticipated population, he said.  

Cheng’s firm shared with the city of Burnaby an award from the Planning Institute of B.C. for excellence in planning practice for the City of Lougheed master plan. Karin Hung, Burnaby’s senior current planner, said the city is most proud of the fact that new residents and the general public will enjoy use of a number of facilities in the development.

“Significant public amenities will be delivered with each phase of development,” she said in an email. “Thirty per cent of the core area will be public open space, including a civic park and plaza at the heart of the core area, a weather-protected transit plaza, a naturalized creekside park, a pair of terraced pocket parks, and an extensive network of tree-lined streets.

“The area will have 4.5 kilometres of new pedestrian pathways, five kilometres of new cycling routes, and 3.5 kilometres of upgraded sidewalks.”

As the plan is executed, she said, there will be a continuous stream of bonus funds directed back into the community for major civic amenities, including a community centre, pool and library or other amenities such as affordable housing, non-profit office space and public art.

Tower One will be in the southeast quadrant of the City of Lougheed at the corner of North Road and Austin, less than a one-minute walk to the Skytrain, said sales manager Angelica Yang.

Home sizes will range from 550 to 1,250 square feet with an impressive array of floor layouts. There are eight one-bedroom models, 10 models of two-bedroom and two bedroom and den homes, three three-bedroom models and two versions of the three-bedroom and den suites.

All suites come with balconies that have room for outdoor furniture. The balconies are generously proportioned with a one-bedroom model of 561 square feet having close to an equal amount of outdoor space (496 square feet) Balcony space for two bedroom models range up to 661 square feet and include wrap-around configurations. Some three-bedroom models come with two balconies, each facing in different direction taking in spectacular views.

All suites have at least one parking stall and a storage locker.

Retail is mixed in throughout the whole development, Yang said. Buyers can feel confident that Shape will be there years from now overseeing the roll-out. “We control the entire asset and we have a long-term commitment to the master plan.”

Inside the homes, Shape prides itself on making the best use of space. Homes have floor-to-ceiling glass allowing in lots of light. Every kitchen is configured in an “L” shape with an island topped by polished stone. Appliances are premium quality Bosch with a gas cooktop, and a wall oven, refrigerator and dishwasher integrated into full-height European cabinets that provide 30 per cent more storage space.

Providing additional storage space is a full-height kitchen pantry. Finishing off the modern look is recessed lighting and a marble herringbone backsplash. Shape has also created dedicated space in most homes for owners to add a computer work station.

The 18,000-square-foot amenities facility spans three levels. Inside, residents can organize game nights and table tennis tournaments, enjoy yoga, Pilates or intense cardio workouts, host festive holiday dinners in private event lounges with full kitchens.

Residents can enjoy spectacular sunsets and fresh air on the facility’s rooftop with its community garden plots for raising vegetables and areas for lounging and open-air yoga. The space also includes outdoor sitting areas and barbecue areas.

© 2016 Postmedia Network Inc.

Numerous factors precipitated the Canadian housing crisis – analyst

Friday, October 28th, 2016

Ephraim Vecina
Mortgage Broker News

A hodgepodge of factors contributed to the current state of Canadian real estate, which has seen an increasing number of affordability refugees fleeing from the hottest markets.
 
Bank of Nova Scotia vice president of economics Derek Holt stated that a combination of record-low interest rates and careless federal-level actions has led to unprecedented amounts of household debt and a price-growth juggernaut that now has the Liberal government “scrambling to undo it.”
 
“The rule shifts contributed, as did the long-term decline in rates both through global bond markets and Bank of Canada actions, among other factors,” Holt wrote in his report, as quoted by The Globe and Mail.
 
Holt added that any moderating effects of stricter federal and provincial policies have been offset by rock-bottom fixed and variable mortgage rates. The analyst further argued that B.C.’s 15 per cent tax on foreign buyers is emblematic of the simplistic approach that Canadian governments take in addressing the affordability crisis.
 
Such measures since 2008 “did not derail housing or mortgage markets,” Holt said. “Amidst endless fear mongering, tighter rules still gave way to record high household debt and house prices.”
 
“Much of that was because of the offset from lower interest rates, and here we are once again talking about the possibility that the Bank of Canada could cut rates and further feed market household imbalances assuming – as I do – that the mortgage book is still rate sensitive.”

Copyright © 2016 Key Media Pty Ltd

Additional foreign buyer info released

Friday, October 28th, 2016

Justin da Rosa
Mortgage Broker News

The fear following Vancouver’s 15% foreign sales tax was that those buyers would be pushed to Toronto. Has that happened?

The answer may soon be available.

Urbanation released a survey of condo foreign purchasers, which found foreign buyers account for just 5% of Toronto condo sales, compared to 52% of condo sales going to domestic investors.

“The results of this very important survey show a rather limited role of foreign buyers in the GTA new condo market and a very significant overall share of investors,” Shaun Hildebrand, senior vice president of Urbanation, said. “These estimates coincide with the percentages of new condos entering the rental market upon completion, indicating the important role investors play in the GTA housing market.”

Of course, the share of foreign investment could spike in the coming months now that many have – at least anecdotally – been pushed out of Vancouver’s market by the aforementioned foreign sales tax.

So future data will paint a clearer picture. The good news is that we now have a baseline to compare to.

Urbanation’s survey includes developers and real estate firms that represent new condo projects.

It covered all sales that have occurred year-to-date, Hildebrand told MortgageBrokerNews.ca, and includes completed projects, pre-construction, and those under construction.

The survey also pinpointed the Toronto area investors are most likely to target.

“Among projects indicating a presence of foreign buyers, shares of units sold to foreign purchasers ranged between 1% and 25%. Shares of sales to domestic investors ranged between 5% and 90%,” Urbanation said in a release. “The highest shares of sales to foreign purchasers and domestic investors were generally found within centrally-located projects in the Downtown Toronto area.”

Copyright © 2016 Key Media Pty Ltd

U. Gary Charlwood reflects on 40 years of Century 21 in Canada

Friday, October 28th, 2016

Dennis McCloskey
REM

When U. Gary Charlwood immigrated to Canada from England 50 years ago as a young man and got a job in the airline business, little did he know he’d end up spending more than four decades enjoying a high-flying career in the Canadian real estate industry.

He worked for Western Airlines (now Delta) and CP Air (now Air Canada) and before the age of 30 he was holding executive positions in the Canadian airline field. His career was taking off and he was satisfied in his work but he wanted to pilot his own ship, so to speak. He had a desire to do more. “I wanted to go into business for myself,” he says. “I wanted to do better.”

Turns out, he did better himself. The Vancouver-based entrepreneur is founder and executive chairman of Century 21 Canada, which has more than 9,000 system members in nearly 400 offices in 272 cities. He also heads the family-owned Charlwood Pacific Group (CPG), which includes Century 21 Asia-Pacific; Uniglobe Travel International; Centum Financial Group, which is a national network of independently owned and operated mortgage broker firms; and Real Property Management Canada. Together, these companies have more than 1,800 franchise locations with more than 24,000 support staff in over 65 countries, making it one of Canada’s largest international franchise systems.

Charlwood’s entrepreneurial dream began to take flight when he attended a task force on travel that made him think of possible layoffs or mergers in the airline industry. He realized he didn’t want to hang his hat on those future possibilities. He considered going into the insurance business but that didn’t appeal to him. Instead, he used three months of personal savings to live on and earned his real estate licence. In his 10th week as a real estate agent, he sold his first house. After that, his new-found vocation began to soar. “I went on a tear and sold 115 houses in the next 15 months,” he says. Soon, he was making five times his annual salary as a director of consumer affairs with Canada’s largest airline company.

He became 50 per cent owner of a Vancouver real estate firm and grew it from six salespeople to nearly 60. After buying out the other 50 per cent he was approached by Century 21 International in 1975 and he and a partner were offered the master franchise for Century 21 Real Estate Canada. By early 1976, a few months before Steve Jobs and Steve Wozniak started a company called Apple, U. Gary Charlwood was on his way to realizing his ultimate dream. He later he bought out his co-founder and was in the process of building Century 21 Canada into one of the largest real estate companies in the country.

On the eve of celebrating the company’s 40th anniversary, Charlwood was asked why his enterprise became so successful. Without hesitation, he names several factors, including being innovative, having a good product, and using a team approach to his business. “There are a number of reasons for our accomplishments but when we first started we were the only trainers in the industry,” he says. “There was a story going around in the early days that one large real estate company would tell its recruits, ‘Why don’t you go to Century 21 to get trained and then come work for us?” He adds: “That was a long time ago; we’re all good competitors with each other now.”

As Charlwood speaks on the phone, gazing out the window from his Vancouver home at the spectacular view, with his 193-lb. American Mastiff by his side, he emphasizes that his family-run firm has a team approach to business and discusses how he has always nurtured this family context.

“We have been very fortunate over the years to have a phenomenal group of people working for us and it is this team spirit that has played an important role in our successes,” he says. “I have always treated all of the people who work in our organization as though they were partners. Everybody plays an integral role and contributes to the whole firm. If one person fails, it has an impact.” He notes that the team spirit of his corporate staff is especially “key to me” and acknowledges there is “longevity in management” at the firm. Feedback has always been an important component in his approach to business and he points to his annual Chairman’s Circle when some 80 of his top franchisees meet to discuss various topics of interest to the Century 21 brand, including, “What’s happening in the marketplace that could impact us; what do we need to do to stay on the leading edge; and what new technological platforms do we need to pursue beyond what we are already doing?”

As the first franchisor in the industry to span coast-to-coast in Canada, Charlwood takes great pride in pioneering and paving the path for others to follow and he likes to think he played a role in “professionalizing” the industry. The titan of the real estate industry is generous with his praise of those who’ve helped him along the way — including some deceased executives — and current key players, such as his two sons: Martin, who is vice chairman and CEO of Century 21 Canada and president and COO of parent company CPG; and Christopher, an executive director of the firm who sits on various boards and is involved in the strategic planning and financial aspects of the organization.

The elder statesman also speaks fondly of the now-retired Don Lawby, who joined Century 21 in 1976 as a sales associate and rose to become its president in 1988. Charlwood likes to tell Lawby, “You joined me as a private and left me as a general.” Credit is also given to Brian Rushton, current EVP, “who joined as a franchisee and, with his brilliant humour and inspiration, guided us on the technology front.” Tracy Bartram, EVP and CFO for the parent company, is touted for her skills in the finance, legal and corporate services departments.

Charlwood concedes that without people who “do what they do and do it well” he would not have reached the pinnacle of success that he now enjoys. Notable among his many career highlights is being the first Canadian to be inducted into the International Franchise Association’s Hall of Fame and the American Society of Travel Agents Hall of Fame. In 2016, Charlwood Pacific Group was also recognized with the Canadian Franchise Association’s Hall of Fame Award.

A former marathon runner and an active swimmer, Charlwood says he enjoys his life and has no plans to retire. When asked to describe his current role with CPG, he says he sees himself essentially as a strategist. “I am the composer: I help Martin write the music and he conducts the orchestra.”

When Martin was asked about his father’s metaphor he said he is not surprised by the reference because his dad is a musical aficionado. He confirms that the two do work in concert together, with the senior Charlwood working on long-term strategy while Martin works closely with the senior management team “to help fine-tune that long term strategy and to execute on the short term and midterm must-do’s.”

Martin says he and his brother, Christopher, knew at an early age they’d like to follow in their father’s footsteps. When his brother was 14 and Martin was 12, their father was in the process of founding Uniglobe Travel International and he asked their advice in choosing the brand’s logo. “We were captivated; hook, line and sinker,” says Martin, while adding their father never “badgered or pushed us to get us into the travel or real estate business.” When the boys were not in school, Gary would invite them to his business meetings where the young lads would sit at the back of the room soaking up what was being discussed.

“His business philosophy was and is to teach people for themselves, not by themselves.” Martin adds, “He set up a structure on how to run Century 21 and Uniglobe, and in my early days in the business it was all about learning from the system and the individuals within that system that he created, rather than learning from him, directly. That came later when he and I worked more closely together when I became president of some of the divisions.”

Martin describes his father as kind and caring to those around him and says he always recognized his father’s leadership skills. “He was always the coach of the soccer team when we were growing up and people just gravitated to him,” he says. “He always had –and still has– very creative and valuable things to share with people. And he sure can hold an audience.”

Martin, who graduated from the University of British Columbia in 1990 and has worked in nearly every facet of the family business, is an inveterate traveler, passionate snow skier and boater, has a healthy appreciation of wine and is a partner in Trim Wines in Calif. As he prepares to take over the reins of the company one day, Martin says he shares the same business philosophy as his father and adheres to the team member collaboration style of business. “If we can’t have a good time with someone and enjoy their company over dinner, we’re not sure we can work or do business with them.” He adds that he and his father share three tenets of business practice: empower people to get the job done; give them the resources to get it done; let them get on with it.”

When asked about the future of Century 21, Martin outlined a few pillars of growth: “Recruit more agents and brokers to our Century 21 brand and increase the number of homes that we help our customers buy and sell through the brand.” He maintains it is also important to help the broker network grow their individual local business through acquisitions and/or mergers of other brokerages in their local marketplace. He adds that the company will continue to refine their industry leading work in the digital world, especially as it relates to marketing real estate on the Internet.

In a salute to his pioneering businessman father, Martin adds, “We have always viewed ourselves as a ‘thought leader’ and plan to continue as such.”

On a more personal note, Martin says this of his father and his family, including the Century 21 family: “We make sure to enjoy the ride that life provides us and make sure to take advantage of all the opportunities that come knocking on our doors.”

© 2016 REM Real Estate Magazine

Building science specialist: What to look out for in a condo

Friday, October 28th, 2016

Justin da Rosa
Canadian Real Estate Wealth

What’s a building science specialist? Someone who will make sure you don’t take a bath on your condo investment. We spoke with one who told us the key things to consider before investing.

As Brian Shedden explains it, a building science specialist is “like a hybrid engineering discipline – building science is the study of how we separate indoor environment from outdoor and how living in the building actually impacts it.”

He’s serviced the condo market for almost 20 years and he’s got a few tips for investors looking to purchase a unit.

“Really you have two scenarios: You’re either going to buy brand new condominium or you’re going to buy one that’s of some vintage other than new – it could be 10, 20, 30 years old,” Shedden, who is the senior building envelope specialist at Entuitive, told Canadian Real Estate Wealth. “In the case of an older condominium, some of the pluses are any of the original construction deficiencies have been addressed.

“Buildings are built by real people using real hands and oftentimes they’re not the best in craftsmanship. These problems usually show up in the first year or two,” he continued. “So with an older building you’re getting some measure of assurance that some of the major issues have already been dealt with.”

One thing you need to be wary of when purchasing an older unit, however, is the state of the building’s reserve fund.

These funds are put in place to ensure sufficient funds are available to cover major projects, such as damages to the roof, windows, doors, balconies, and other shared elements.

“So really what you’re looking at is a healthy balance on a per-unit basis,” Shedden said. “So if you’ve got 20 units in this condominium and they’ve got $1 million in the reserve fund, you’ve got $50,000 a unit.”

If the fund is low, and lacks the funds to support a maintenance project, a special assessment can be levied against unit owners.

“The thing to be wary about with a special assessment is that it’s the purview of the board of directors to levy that,” Shedden said. “And so in virtually all cases that I’m aware of, when a special assessment comes down the pipe it’s usually rather substantial; it’s usually quite a shock to the residents.”

Of course, some investors choose to purchase a new unit – which minimizes the chance of requiring a special assessment for the foreseeable future.

Still, there are things to consider before purchasing a shiny new condo.

“On the other hand, if you’re looking at a new building, some of the things to look at are builders’ deficiency lists. Sometimes it takes a very long time for the builder to correct all of the outstanding deficiencies,” Shedden said. “And one of the safeguards that we have is the new home warranty program, which provides you with substantial warranties on the structure of the building, the finishes. So you want to make sure that these documents are all available and reviewed.”

Copyright © 2016 Key Media Pty Ltd

B.C. real estate superintendent vows far-reaching changes

Friday, October 28th, 2016

Ephraim Vecina
REP

With his duties beginning this week, British Columbia’s new superintendent of real estate promised sweeping changes in the regulation of the province’s housing industry, with a focus on eliminating unethical practices that have contributed to home price growth.
 
“This is a huge reset. This is a significant — you could say unprecedented — change in how the real estate profession is regulated in British Columbia,” Micheal Noseworthy told CBC News.
 
“My office has been given new powers and new ability to do things like make rules and oversee the activities of the council,” the former lawyer from Newfoundland and Labrador added.
 
Among the superintendent’s changes is the launching of an independent advisory group tasked with reviewing the real estate industry, as well as the closing of a regulatory loophole that facilitated shadow-flipping.
 
Noseworthy also announced a dramatic increase in penalties for real estate professionals employing unscrupulous business practices, up to $250,000 for each agent and up to $500,000 for brokerages. He added that further changes would be implemented down the line.
 
“My sole job is to protect the public. I’m not here for realtors or the industry; I’m here to protect consumers and to make sure that British Columbians are protected when they’re making the biggest purchase they make in their lives.”
 
Noseworthy—who has previously worked for Yukon in a similar capacity, bringing along much experience as a lawyer and a regulator—was appointed as part of B.C. Premier Christy Clark’s drive to introduce greater government oversight in the current economic environment.
 
Earlier this year, Clark said that prior to Noseworthy, the B.C. Real Estate Council’s regulation of the industry didn’t prove effective in addressing the fundamental causes of the housing crisis.

Copyright © 2016 Key Media Pty Ltd

Housing rules not factored into CMHC forecast

Friday, October 28th, 2016

Justin da Rosa
REP

he Crown Corporation finalized its latest forecast prior to the announcement of the recent mortgage rule changes – but would those changes have altered its outlook?

Not materially, it turns out.

“(The mortgage rules) can certainly have an impact, it’s not in our baseline outlook because those mortgage rule changes were announced after our forecast was finalized,” Bob Dugan, chief economist with CMHC told reporters during a conference call Wednesday. “We actually looked at that in terms of alternative scenarios to see whether potential impact of the mortgage rule changes would lie within our forecast ranges and we concluded they do.”

The Canada Mortgage and Housing Corporation released its fourth quarter Housing Market Assessment Wednesday, which concluded most Canadian markets are overvalued and that price growth is expected to slow through 2018.

CMHC concluded overvaluation and overbuilding in many markets will contribute to slower price growth and moderated housing starts over the next two years.

Since the report was finalized prior to the announcement of October’s mortgage rule changes, the potential impact of those was not worked into the Crown Corporation’s assessment.

However, Dugan believes the changes will cause sales, prices, and starts to trend slightly lower than previously believed.
“So what we’ve done is we’ve kind of looked at our own data on mortgage insurance to sort of see, looking backwards over recent applications, how might that affect approvals of mortgages on applications we’ve already received,” he said. “We’ve come to the conclusion … taking that information with the fact that mortgage insurance accounts for about 30% of the flow of loans, we’ve come up with an estimate that about 5-10% of mortgages would be affected by the policy changes.”

Copyright © 2016 Key Media Pty Ltd