Archive for December, 2016

Home thoughts for the new year

Saturday, December 31st, 2016

Michael Geller
The Vancouver Sun

As Samuel Goldwyn once said, it is not wise to make forecasts, especially about the future. Nonetheless, I am delighted to review my past Vancouver Sun housing forecasts and offer a few more as we enter 2017.

In the coming year, I foresee changes in zoning, a focus on heritage homes and new proposals for rental housing — but more on that in a minute.

My first year-end column was written 10 years ago as I set off on an around-the-world sabbatical. Titled “Affordable housing rises on wise use of land,” it urged municipal planners to allow row houses and apartments to replace single-family houses along such arterial roads as Oak Street.

It also promoted reduced parking standards to facilitate redevelopment of parking lots and rezoning of single-family lots to permit alternative housing forms, including back-lane homes, duplexes and triplexes.

Today, there are indeed new multi-family developments along several Vancouver arterials, including Oak, Cambie, Granville and King Edward. Sadly, however, new single-family homes continue to be being built along major transit corridors throughout the region.

Not a wise use of land.

A 2012 year-end article offered 10 predictions for 2013.

These included an increased popularity of car-sharing and a corresponding reduction in minimum parking requirements.

New provincial legislation requiring depreciation reports on the condition of condominium projects was expected to result in concerns about the future of many older projects requiring significant repairs.

Other predictions included an increased interest in fee-simple row houses, affordable micro-suite developments, and modular housing.

While car-share programs did become more popular, I was wrong about an increased interest in fee-simple row houses and micro-suite developments. However, a container-housing development did get underway in the Downtown Eastside.

At the end of 2013, Westcoast Homes editor Barbara Gunn invited me back to offer 2014 forecasts.

Again, I predicted owned row houses would become popular, especially among those not yet ready to move to an apartment, or those wanting to avoid condominium living.

I also forecast community-styled “pocket neighbourhood” developments, offering a mix of smaller detached, duplex and coach houses. I foresaw taller highrises, but noted that in some neighbourhoods, developers would be encouraged to pursue alternative to high-density housing, such as Toronto-style stacked townhomes.

Other forecasts included an increased interest in six-storey wood-frame apartment buildings, especially for rental and affordable ownership housing along arterial roads, and mid-rise apartment buildings throughout other Metro municipalities, similar to those being built along Cambie Street.

I suggested we might see interest in floating home communities and more creative and innovative highrise building designs.

On the critical question of housing affordability, those hoping for a decline in house prices were told not to hold their breath. Increased immigration and aging baby boomers from other parts of Canada would keep demand and prices high.

Looking back on 2014, I was again wrong about the fee-simple row houses and pocket neighbourhood developments, but we did see more stacked townhomes and six-storey wood-frame buildings get underway.

We also saw more interesting and colourful highrise designs, and completion of the first homes in the delightful Mosquito Creek floating-home community.

Last year, I offered four predictions.

Noting the 2013 provincial legislation requiring strata councils to commission depreciation reports, and another legislative change allowing the winding up of a condominium project with just 80 per cent membership approval, we could expect a number of older condo projects to be sold to developers as redevelopment sites.

I was right. Furthermore, many other condo projects can be expected to wind up and be sold in the coming year.

Other predictions included increased interest in co-housing, a hybrid form of development combining the best of co-operative and condominium living.

Several new co-housing developments did attract considerable attention, one for seniors in Sooke, and another in East Vancouver.

Since Vancouver council’s approval of the Shaughnessy Heritage Conservation Area was so controversial, I did not expect any other conservation areas to be approved in 2016. However, numerous municipalities could be expected to develop heritage policies to encourage conservation of heritage structures.

This turned out to be correct.

Again, Sun readers were told not to hold their breath waiting for a decline in house prices. Sadly, I was right, although we did see some softening of the market in the last quarter.

As we look to 2017, some of my previously failed forecasts may come true.

We can also anticipate some new twists in zoning to encourage creation of more affordable housing choices.

Firstly, since today’s light-industry and high-tech industry is very different from the noxious industries of the past, some municipalities will agree to allow a mixing of housing and industrial uses on light-industrial zoned land.

We can therefore expect some proposals for new rental housing alongside or above light-industrial buildings, resulting in more affordable employee housing, and new revenue sources for the companies.

Historically, low vacancy rates will also encourage some municipalities to rewrite zoning bylaws to recognize tenure.

The result will be multi-family zoning bylaws that allow a certain floor space ratio — or FSR — for condominiums, but a higher FSR for purpose-built rental housing.

There will continue to be increased interest in the conservation of heritage and character houses. Although municipalities have been talking about this for years, zoning changes will be introduced in 2017 to encourage conservation in return for density bonuses, along with permission to build a coach house or subdivide a larger home.

As for the future of housing prices, the B.C. Real Estate Association is predicting the average MLS residential price will decline 6.4 per cent next year. However, before existing homeowners start to worry, most of that change will be due to relatively fewer higher priced homes selling in highly populated regions, particularly Metro Vancouver.

My view is we can expect housing prices to remain relatively flat over the coming year. However, rental rates will continue to rise well beyond the provincial approved rate increase of 3.7 per cent.

This will be due to increased demand for rental housing, combined with the fact that in many municipalities other than Vancouver, many older rental buildings will be demolished to make way for new condominium developments.

Twelve months from now, we’ll see how my predictions shape up. And on that note, best wishes for 2017!

Michael Geller is a Vancouver-based architect, planner, real estate consultant and property developer. He also serves on the Adjunct Faculty of SFU’s Centre for Sustainable Development and School of Resource and Environmental Management. He can be reached at [email protected] and his blog can be found at gellersworldtravel.blogspot.com.

© 2017 Postmedia Network Inc.

Vancouver’s housing crisis has been four decades in the making

Saturday, December 31st, 2016

A look at how the real estate market got here, and where we should take it

Douglas Todd
The Vancouver Sun

Metro Vancouver residents have struggled with housing crises since the 1970s.

Four decades ago, even when the gap between local wages and housing prices was not nearly as severe as it is today, economist Gordon Soules published an eye-opening book titled The Housing Crisis: Causes, Effects, Solutions.

In it, Art Phillips, Bill Vander Zalm and Mike Harcourt detail a fist-full of reasons that house prices were so high in Metro Vancouver, including lack of zoning density and inadequate social housing.

The politicians did not shy away from how high immigration rates and foreign capital were among the biggest contributors to the city’s rising prices — phenomenons re-confirmed this year by UBC geographers David Ley, Dan Hiebert and other scholars.

What follows is an historical perspective on how Metro Vancouver came to 2016, which has been arguably the most dramatic year in the city’s escalating housing crunch. It also offers a look at the future.

In the mid-1970s, then-Vancouver mayor Phillips, one of the city’s most progressive leaders, wrote in The Housing Crisis:

“I maintain that the primary approach to solving the housing problem in the Greater Vancouver area lies in the immediate reduction and future control of immigration.” 

A decade before Expo ’86, when Canadian politicians began concerted wooing of East Asian investment and migrants, Phillips said, “We can and should control that proportion of our population pressure that is represented by the influx of foreigners.”

Then-alderman Mike Harcourt, who would go on to become Vancouver mayor and NDP premier, listed several causes of high prices, but also focused on rapid in-migration.

“First, it is essential that we relate both the local and the national housing problems to our immigration laws. Are we in fact merely trying to create new housing, as well as new employment opportunities, just to keep pace with the yearly average of 200,000 immigrants that Canada is admitting every year?” Harcourt said.

“Perhaps we should seriously consider whether we can continue to admit so many immigrants. Further, maybe we should make it less desirable for people to migrate to Vancouver from other areas of Canada by making it more attractive for them to remain where they are.”

Phillips and Harcourt were offering policy recommendations in an era when Canadian governments of the left, right and centre routinely adjusted immigration rates in response to changing conditions in the economy and labour market.

Athough Vander Zalm didn’t directly emphasize immigration, he complained about speculators who “compound profit without doing a thing for it.”

Despite declaring he was “not a socialist,” Vander Zalm said the “ideal” response to the housing crisis would be one in which “most land would be owned by the government and leased to the people.”

Known for his frankness, Vander Zalm later, as premier in the late-1980s, zeroed in on immigration, taxes and rising prices by instituting the property-transfer tax.

“Foreign investors, many speculatively, are driving up home prices beyond the reach of British Columbians. These people paid no tax and most have never paid a B.C. tax of any kind,” Vander Zalm said.

 “These welcome newcomers should also contribute to the needs of the province, and this should be done through some sort of ‘property transfer tax’.”

Early housing worries snowballed in 2016

Vander Zalm’s property transfer tax has been expanded. Premier Christy Clark raised the rate again this year, to ostensibly gain more revenue from rich immigrants, foreign buyers and local proxies.

Indeed, three levels of government brought in policies in the last half of 2016 in response to anger over the way Metro Vancouver has transformed, according to Demographia, into the third-most-unaffordable city in the English-speaking world.

In the 1970s, when The Housing Crisis was published, “unaffordability” — which can be measured by the ratio of real-estate prices to local earnings — was about 3 to 1.

By 2016, it had expanded to 13 to one.

What have governments done in the face of foreign capital and an estimated 400,000 millionaire immigrants and their family members moving to Metro Vancouver?

The B.C. government’s 15-per-cent tax on foreign buyers was the first big surprise of 2016, proving popular.

But the province’s interest-free loans for first-time homebuyers, introduced in December, have been denounced by many as inflationary and a pay-off to political donors in the real-estate industry.

The City of Vancouver, meanwhile, began imposing a tax in 2016 on empty houses, and most suburbs increased zoning density.

And the federal government made moves to close the loophole that allows Canadian lawyers to launder illicit cash. Ottawa is also instituting a “stress test” to make it harder to obtain mortgages.

Trudeau and Harcourt on the future

Back in 1976, Harcourt predicted that Metro’s housing crisis would be largely solved by the federal government reducing immigration levels “by the early ’80s.”

But the opposite happened. The last prime minister to lower immigration rates was Pierre Trudeau.

After Brian Mulroney was elected in 1984 — expanding free trade and creating more open borders — politicians began suggesting anyone who wanted to lower immigration levels was xenophobic.

Justin Trudeau says he has no intention of following his father’s lead. This year, he bumped up the country’s immigration rate to the highest it’s ever been, more than 300,000.

“Far be it for me to question a decision my father might have made in the late-1970s,” Trudeau told the Vancouver Sun and Province editorial board on Dec 20, “but we’re on a track to welcome more immigrants over time as our population ages.”

The prime minister recognized 45 per cent of the population of Metro Vancouver, and almost 50 per cent of Toronto, is foreign-born, adding that B.C.’s major urban centre is facing a more “extreme” housing crisis than the Ontario hub.

“We are going to continue to monitor and make sure that as a fundamental core principle people can afford places to live, whether it be in great cities like Vancouver or in smaller communities across the country,” Trudeau said.

“We are working very, very hard on a housing strategy that we hope to announce in the coming months that is going to directly address … places like Vancouver, where housing is out of reach for middle-class Canadians.”

As for the views today of B.C.’s former politicians, Phillips died in 2013 and Vander Zalm could not be reached for comment.

But Harcourt has many ideas about how Metro Vancouver could move ahead.

The former premier said governments need to respond to how “international capital, a lot of it Chinese,” is flooding into Metro Vancouver, Toronto and other gateway immigration cities.

“Foreign capital regards housing like bricks of gold. It’s considered a safe investment. But it’s massively inflating the markets at the higher end. It’s also impacting other parts of the market, because local people who are professionals and reasonably higher income can’t afford single-family ownership.”

Harcourt believes the B.C. government’s 15-per-cent tax on foreign buyers, and the City of Vancouver’s one-per-cent tax on empty homes, “are bringing down the overheated market in terms of international demand.”

But Harcourt cautioned that Metro’s housing supply, as well as health and educational services, are being over-stretched because 90 per cent of immigrants to the province move to Metro municipalities, which have limited abilities to levy taxes.

“We’ve got to say that we’ve benefited tremendously from our immigration policies. They’re quite pragmatic and shrewd,” Harcourt said, adding the topic often strikes a “raw nerve”.

However, the former premier said governments need to respond to accelerating urban immigration.

“Are we going to reduce the numbers of immigrants until we can kind of catch our breath in terms of housing and everything else? And/or are we going to increase the affordable housing, and other services for immigrant reception?”

Harcourt maintained these are valid questions that people shouldn’t “run around saying are racist.”

He added that the federal government has a major role to play in getting back into funding social housing.

A November speech in Vancouver by the head of the Canada Mortgage and Housing Corp. showed how the once-beneficial Crown corporation has become “bankrupt,” Harcourt said.

CMHC CEO Evan Siddall lectured Vancouverites about “creating an us-against-them” attitude toward foreign buyers, making the dubious claim that less than 2.3 per cent of condos in Toronto and Vancouver are owned offshore.

Harcourt, however, lamented how the CMHC “has gone from being really aggressive at creating livable and affordable cities to being basically a mortgage insurer. It’s lost its soul.

“I remember CMHC when it really had some vision and leadership and some courage to take on these tough issues. And now, it’s just turned into a shadow of itself.”

In the ’80s and ’90s, the federal government, through the CMHC, was building 25,000 subsidized housing units a year across Canada, Harcourt said. The City of Vancouver alone built roughly 20,000 social-housing units during that period.

But federal efforts to support non-profit housing crashed in the early 1990s.

“(Former Liberal finance minister) Paul Martin got rid of social housing to reduce the deficit. Paul is a friend, but in my opinion, it was one of the dumbest public policy decisions in the last 50 years,” Harcourt said.

“Social housing just got lost in the shuffle. And now we’re suffering the consequences of 25,000 non-profit units a year over 22 years not being built. And that’s 550,000 units of housing across Canada. You wonder why we’ve got a housing crisis? That’s a huge part of it.”

© 2017 Postmedia Network Inc.

B.C. homebuyer loan may have zero impact

Thursday, December 29th, 2016

Program may not change how much capital buyers can access, experts say

DAN FUMANO
The Vancouver Sun

Both the praise and condemnation heaped upon the B.C. government’s homebuyer assistance program this month have been misguided, some B.C. mortgage industry professionals say.

On Dec. 15, the government unveiled the B.C. Home Owner Mortgage and Equity Partnership program, announcing they would invest $703 million over three years, touted as a boon “to help an estimated 42,000 B.C. households enter the market for the first time.”

While the development industry welcomed the program, economists decried its potential to further inflate housing prices and place over-leveraged borrowers at risk. But some mortgage brokers and bank employees are skeptical about the program for the opposite reason: they predict it will have a minimal impact, and will not provide homebuyers with any additional purchasing power.

Chad Oyhenart, managing director of DLC Canadian Mortgage Experts, said: “There were too many question marks that anyone on the inside of the broker industry or the lending industry could point out right away.”

“I don’t think you’re an insider in this business and a broker, and not questioning the legitimacy of this program,” he said. “Everyone seems to be in agreement that it’s not as clean-cut and straightforward as the government will have you believe.”

The 25-year loans are interest and payment-free for the first five years, at which point, homebuyers begin monthly payments at current interest rates.

Oyhenart said his contacts at banks and mortgage finance companies were “shocked” by the announcement of the program, and while none of them had confirmation about how their institutions would treat the government assistance, Oyhenart expected lenders would treat the government money as debt, and not as equity, meaning it would be included in debt service calculations and “limit the maximum amount of the mortgage you’re going to be able to qualify for.”

Putting it another way, Dustan Woodhouse, a Coquitlam-based mortgage broker with Dominion Lending Centres, said: “Mr. and Mrs. Homebuyer have two options: you can borrow $1 from the bank, or you can borrow 95 cents from the bank and up to five cents from the B.C. government. But you’re still only borrowing $1. You cannot borrow $1.05. That’s not happening. And, of course, it’s always worth repeating the fact it is a loan, not a gift.”

At least one of Canada’s largest mortgage lenders, Scotiabank, has said they will include the government money in debt service calculations.

Scotiabank spokeswoman Heather Armstrong said in an email Wednesday to Postmedia: “The new loan provided by the B.C. Government Home Partnership Program will factor into our approval process in the same way a personal loan or a repayable gifted down payment would. We will include the loan in the customer’s debt service calculations to ensure they can afford the payments once the ‘grace’ period has run out.”

Scotiabank’s statement, said NDP housing critic David Eby, “suggests that for major lenders, (the program) will have no impact on the amount of capital people can access.”

“If that’s the case for all the banks, then I think the expectations of government — that this program will actually help anyone, as well as the expectations of economists and myself — that this would increase prices and increase debt loads — would not be correct,” Eby said. “Because the loan would basically deduct from the amount of money the person could borrow, so it would have no net effect. If that’s the case, it would be profoundly embarrassing for the government.”

A spokeswoman for the B.C. Ministry Responsible for Housing was unable to immediately respond Wednesday.

Oyhenart said the program may be more about “pomp and circumstance” than about helping people.

“The B.C. government here, is obviously doing what they can, coming into an election year,” Oyhenart said. “Whether it’s viable or not, it doesn’t even matter … The government can still say ‘Hey, we’re trying our best here to help everybody get in to a home here in B.C.’ … It just makes them look like good guys.”

© 2016 Postmedia Network Inc.

Premier Clark goes on the offensive with home-loan ad blitz

Thursday, December 29th, 2016

Mike Smyth
The Province

The B.C. government launches an ad campaign in support of its first-time homebuyers loan program. Would the NDP scrap the program if they win the May election?

You can’t turn on a TV set these days without getting blitzed by the onslaught of taxpayer-financed commercials touting Premier Christy Clark’s interest-free loans for first-time homebuyers.

The ads are receiving heavy rotation after the government nearly doubled its advertising spending late in the year — pumping it up to $15 million from the $8.5 million originally budgeted last spring.

The government calls the ads “public information” designed to give people crucial details about the loan program announced by Clark on Dec. 15.

But if you think these ads aren’t timed to a political cycle leading to next May’s provincial election, you should give your head a shake.

Clark calls the loan program her personal highlight of 2016 and she said it will play a key role in her re-election drive in the new year.

“I think it will be a big issue in the election,” Clark told me in a year-end interview.

“Putting $37,500 into people’s hands with a zero-interest, zero-payment loan for five years so they can get that down payment together for that first home — I think that makes a huge difference.”

The program, which begins accepting applications next month, has been criticized by economists who say it could actually drive up home prices in an overheated market.

And the opposition New Democrats also slammed the program, calling it irresponsible for the government to encourage people to take on additional debt they might not be able to afford.

But Clark doesn’t care what economists think. She cares what voters think. The Liberals see this one as a winner.

And Clark is clearly delighted the NDP came out against the loan program, arguing qualified applicants must first secure a pre-approved mortgage from an accredited lender.

“We’re talking about people who have been approved for a mortgage by a bank in a country with some of the toughest banking rules in the world,” Clark said.

“So the bank thinks they’re worth the risk but the NDP thinks, in all of their paternalistic wisdom, that people can’t handle another loan up to $37,500 amortized over 25 years?

“It’s just so typical. What the NDP are trying to say is they think they can spend your money better than you can. I think citizens can spend their own money way better than government can.”

You can already hear Clark warming up her campaign-trail soundbites on this one as the taxpayer-financed commercials plant the program squarely in the minds of voters.

But NDP leader John Horgan says he will remind those voters that Clark’s Liberals spent the first half of this year arguing against government intervention in an inflated housing market that saw prices soar far beyond what most non-millionaires can afford.

“They just denied there was a problem until they couldn’t ignore it any longer and then they came up with their shock-and-awe approach,” Horgan said, noting the loan program was preceded by last summer’s dramatic 15-per-cent tax on foreign home buyers.

© 2016 Postmedia Network Inc.

Volkswagen?s financial arm buys Vancouver startup PayByPhone in scramble for technology

Thursday, December 29th, 2016

PayByPhone app to help automaker compete with the likes of Uber

ARMINA LIGAYA
The Vancouver Sun

Vancouver-based mobile parking payment company PayByPhone has been acquired by Volkswagen AG’s financial services arm as the German auto giant races to get a foothold in the future transport economy.

PayByPhone, which said it processes more than US$250 million in payments each year, allows its users to securely pay for certain parking spaces with their phones and be alerted when their time expires. The app has 12.5 million registered users and can be used in several cities in the U.S., Canada, Australia, New Zealand, the U.K. and France, the company said. PayByPhone has about 100 employees worldwide.

The deal — the terms of which were not disclosed — came after discussions with Volkswagen during the past six months, said PayByPhone chief executive Kush Parikh.

“Now, being part of the overall Volkswagen family, we will probably help drive some strategic initiatives internally across their organization,” he said in a phone interview on Wednesday. “But, fundamentally, we will continue to operate independently and push our payments and smart parking agenda as quickly as possible, and (Volkswagen) will, of course, help accelerate that.”

The purchase of PayByPhone comes less than a month after Volkswagen made a massive push into mobility services such as ride-sharing and commuter pooling apps through a standalone company, MOIA, to compete with the likes of Uber Technologies Inc.

Many of the European carmaker’s competitors including General Motors Co. and Toyota Motor Corp. have also been heavily investing in mobility solutions, said Mark Boyadjis, senior automotive technology analyst at IHS.

GM in January invested US$500 million in ridesharing app Lyft, and said it planned to develop an on-demand network of self-driving cars with the service. Toyota in October announced it plans to establish a Mobility Services Platform that will support car sharing among other things.

Boyadjis sees Volkswagen’s purchase of PayByPhone as a play to address a future where fewer consumers may want to own a car.

He cites slowing car sales in urban areas such as San Francisco and the growing number of consumers who view ride-sharing or car-sharing as preferable alternatives to paying the roughly US$34,000 average price tag of a car plus insurance and upkeep costs.

“Mobility services is very, very much a big opportunity for automakers, and it’s a defensive opportunity,” Boyadjis said on Wednesday. “They’ve seen, frankly, Uber be a giant disrupter to their future sustainability.”

The purchase of PayByPhone also comes a year after Volkswagen Financial Services AG acquired a 92-per-cent stake in Sunhill Technologies GmbH, which offers cashless payment solutions for parking operations in 90 German cities.

“With our acquisition of PayByPhone, we are now the leading provider for the processing and mobile payment of parking procedures,” said Christian Dahlheim, the management board member responsible for sales and marketing at Volkswagen Financial Services, in a statement on Wednesday. “In the future we will be bundling this know-how in a separate business field around the theme of parking.”

In May, Volkswagen invested US$300 million in ride-hailing provider and Uber rival Gett, which is available in 60 cities including Moscow and New York City. MOIA, based in Berlin with an initial team of 50 people, also aims to set up an on-demand connected commuting app, the company added. The first pilot projects are scheduled to begin in 2017.

Buying up technologies such as PayByPhone allows car companies to speed up the integration of mobile service capabilities into their existing vehicles, and better position themselves for a dramatically different transportation market 10 or more years down the road, Boyadjis said.

“Most innovative automakers looking at their 10-year scenario are saying we need to invest in mobility,” he said. “Ford, General Motors, BMW, Daimler, they’re all getting very, very active in investing in ways that their business model can seamlessly change as we evolve into a more shared mobility platform globally.”

© 2017 National Post

First half of 2016 commercial real estate sales eclipses all of 2015 in Metro Vancouver

Wednesday, December 28th, 2016

Commercial sales reach new record this year

Evan Duggan
The Vancouver Sun

A small number of big office deals pushed Metro Vancouver’s commercial real estate sales figures to a new record in 2016, with the first-half numbers surpassing the entire total for the previous year, according to Colliers International’s Metro Vancouver Investment Report.

Halfway through 2016, Metro Vancouver commercial real estate deals totalled $4.28 billion across 819 transactions, smashing 2015’s full-year total of $4.25 billion and 695 transactions, according to the report released earlier this month. The report assessed all commercial investment deals in the region valued at $1 million or more, including office, industrial, retail and multi-family properties.

The office sector experienced the highest sales increase from the same period last year due to a few high-profile acquisitions, including sales of the Bentall Centre, the Royal Centre and the United Kingdom building in downtown Vancouver — sold separately for a total of nearly $1.57 billion.

“The main drivers of this large volume increase is the sales of trophy office assets downtown,” said Curtis Scott, Western Canada manager of market intelligence for Colliers in Vancouver. “I would say that for the remainder of this year it’s probably just going to track along slowly. I haven’t seen any big trades like what we saw earlier in the year.”

But he said the overall office sales and other assets were strong across the board in Metro Vancouver, accounting for $1.8 billion of all commercial property deals in the first half of 2016. “When we take those (trophy) assets away from the overall volume, we still see an increase, and particularly when we look at assets in industrial where we are seeing a shortage of supply and people are seeing this as an opportunity to invest.”

The industrial market in Vancouver was one of the hottest stories of 2016, with stakeholders raising the alarm repeatedly over a region-wide shortage of industrial and logistics space. That asset class represented nearly 20 per cent of total commercial real estate transactions over the first half of 2016, totalling nearly $756 million, according to the report.

Investment in multifamily assets remained hot too, with apartment sales reaching nearly $673 million in volume over 89 transactions in the first half of 2016. Meanwhile, total retail investment in Metro Vancouver reached $1.1 billion in the first six months of the year, nearly double the amount from the same period last year

“Multifamily continues to be an attractive asset to a lot of investors just due to low vacancies and increasing rents, so it offers up good revenue,” Scott said.

He said there has been more investors buying and holding onto residential property, creating land banks with apparent plans to redevelop when the time is right.

“I think a lot of people are waiting for municipalities to change some of the density in those areas,” he said, pointing to Vancouver’s West End and Broadway Corridor as examples. “When we saw the West End plan change … the (city) offered up an immense amount of density, that really caught a lot of peoples’ eyes to buy older product and perhaps look for a long-term play of redeveloping.”

“The first half of 2016 was unlike anything I’ve ever seen,” said Mehdi Shokri, a principal with Avison Young in Vancouver. “From the office sector, definitely, and I think the residential land as well, there was just a lot of deals that occurred in the first half of the year.”

He said the surprise of 2016 were the huge sums of money being spent on Vancouver assets by big-time investors like China’s mysterious Anbang Insurance Group, which bought Bentall I, II, III and IV, and German multi-billionaire Klaus-Michael Kuehne, the buyer of the Royal Centre.

“Typically, over the last few years, institutional activity has been fairly limited just because nobody wants to sell and nobody can buy in our market from an institutional point of view,” Shokri said. “It was pretty shocking to see so many institutional deals come into the market all at once.”

Shokri said their assessments also point to record sales values. “We were showing about $4 billion in sales volume in 2016 year to date,” he said. “From a traditional commercial real estate asset class, office was certainly the highest and that was around $2.2 billion in sales volume.”

Forecasting 2017, Shokri said the massive price tags for big office assets means it’s more difficult to turn a profit in these buildings with existing cash flows and costs. “That will pique my interest to see how low it can go before it becomes very enticing to start to see more institutional capital move money into other markets,” he said.

He said everyone in the market is now taking a closer look at lending rates too. “Obviously, the condo values are getting to numbers that we keep saying we never believed they were going to get there, but they are,” he said. “How much more room is there to keep moving those numbers up because that’s making land values become crazy.”

Political winds are also blowing and could bring more change and disruption to the market with upcoming provincial and civic elections coming into view, he said. “I’m curious to see how that’s going to start to affect the way that people look at deals.”

Decisions over density, housing supply, project approvals and general market confidence all connect to political decisions, he said. “A lot of these things come back to politics when I look at real estate deals, and I don’t think that gets highlighted enough.”

© 2016 Postmedia Network Inc.

If you own apartments, get out while you still can

Wednesday, December 28th, 2016

Opinion: Industry expert says sell, sell, sell

Larry Jacobson
The Province

Over my lengthy 45-year career as a financial advisor, I have been a strong advocate of owning apartment buildings.

But now, as much as it pains me, I am recommending to clients not to further buy any residential revenue properties in the Greater Vancouver area. More importantly though, I am also recommending to them to consider putting their apartment holdings on the market to take advantage of this over-heated, over-bought, apartment feeding frenzy that we are currently experiencing.

This decision did not come lightly, nor did I wake up one morning and decide to sell. Many of my colleagues were, to say the least, shocked that I, as a financial advisor and experienced real estate professional, would have come to this conclusion. My detailed research and the current geopolitical climate made it obvious to me that the values associated for apartment buildings just do not make any economic sense. To quote Judge Judy: “If it doesn’t make sense, it cannot be true.”

Is there a bubble about to burst? No. Is this a crisis similar to the U.S. sub-prime fiasco? No! Then where did my epiphany come from?

Many of you who own apartments believe this market will continue to go on for many more years – and you may very well be right – but this is where I see the issue: When you decide to sell and “cash in,” there may be no bids – they might just disappear — and this could happen overnight. There will always be buyers out there, but only scavengers taking advantage of fear.

In my view, it is not a matter of if, it is only a matter of when. It has happened in the past and it will happen in the future. History repeats!

The rewards that you have experienced have been amazing, but, as my father once said, “Never argue or complain about a gain, even if you have to pay the tax, and leave something on the table for the next buyer or there won’t be a ‘next buyer’.”

Here are my specific reasons why the market will change:

Vancouver and many of the close suburbs have become, or will become, a home to either wealthy immigrants or older retired or semi-retired professionals who have owned their homes for many years. This is evident by schools, especially on Vancouver’s west side, losing students. The VSB is experiencing large budget shortfalls because of declining enrolment. When there are no children entering the elementary school system, this means there are no young families. Demand starts at the bottom, not the top.

Lifestyle choices: People balance their work life and family life with more weighting toward family life. People are just not going to put up with these long commutes from the eastern valley to get a job in Vancouver. Young professionals are moving out of Vancouver to other parts of western Canada, even to Toronto where even there housing is far more affordable than in Vancouver. Think about it: Would you pay rent of $3,000 a month for a two-bedroom condo or $7,500 a month for a four-bedroom home? No, of course not.

Young people want home ownership – not a 900-square-foot two-bedroom condo that consumes half their paycheques just to make the monthly mortgage payment.

Jobs will disappear. Companies will relocate where the young employees have access to more affordable housing — and $4.00 per square foot per month is not affordable rent!

As demand for $2,200 per month one-bedrooms fall, what happens to the value of your apartment?

Economics – it is always the economics: Why anyone would buy an apartment building at say 2.5 per cent to 4 per cent Cap (after renovations and market rents are achieved), especially with rising interest rates almost a sure bet. Where is the upside? There are so many other vehicles that produce better returns, equally advantageous tax treatment, and better liquidity – without worrying about the toilet overflowing or bed bugs.

Financing is becoming much more difficult: lenders want more equity, better covenants and are demanding terms and conditions.

Geopolitical forces are skewed against owning residential rental properties: rent controls, restrictive demolition permits, tough zoning – landlords will always lose politically because they get out-voted by their tenants.

Interest rates rising always means Cap rates don’t lag far behind.

If government can pass the 15% foreign buyers tax (which certainly impacts demand), what else can they pass? Trust me, you won’t like it. Nothing good happens to entrepreneurs when government starts to mess with a business they know nothing about.

Having said all that, if you own a rental property, sell. List your assets sooner than later.

© 2016 Postmedia Network Inc.

15 Real Estate Resources That Will Help You Sell More Homes in 2017

Wednesday, December 28th, 2016

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As we approach the final few weeks of 2016, many real estate agents and business owners are spending time coordinating last-minute closings, sending out holiday cards and gifts to past clients, and maybe even squeezing in one or two more days of home tours and open houses.

The end of the year can also be a great time to reflect on what you learned over the past 12 months—about your business, about your customers, and about yourself.

It’s also a great time to think about what you’re going to do next year to attract new clients, sell more homes, and grow your business.

But let’s face it: the end of the year can be exhausting for a lot of agents. Thinking about what you’re going to do to build a better, stronger, and more profitable business next year isn’t always what comes to mind when you approach the final few weeks of December.

If, however, you want to get ahead of competition and thrive as a real estate agent for another 12 months  and beyond, you have to be willing to put some time into putting together a strategy for the upcoming year.

One of the best low-stress ways to ease into planning for 2017 is to spend a few hours here and there over the holidays exploring resources that relate to your industry and profession.

To help lead you in the right direction, I’ve collected 15 great actionable resources that you can learn from and apply to your business in order to sell more homes in 2017.

Real Estate Trends

You can’t be an effective real estate agent without keeping up with the latest changes and trends affecting your industry. It’s the same for any type of profession—you need to understand how the market is changing, what your potential customers are looking for and in need of, and what you need to do to differentiate from the competition. As you plan for the next 12 months, here are five trends to consider:

  1. The Market Will Continue to Improve. According to the New York Times, buyers purchased single-family houses at the annual rate of 654,000 in 2016, the highest rate since October 2007. In the article from the Times, titled The Housing Market Is Finally Starting to Look Healthy, journalist Neil Irwin highlights the improvements that we’ve been seeing and experiencing in the market over the past seven to eight years. The article provides some great statistics and charts that can help you better understand where the market is likely heading in 2017.
  2. Drones Are Coming. Drones aren’t necessarily new to the real estate market, but they will become a lot more prevalent in 2017 due to some changes announced by the FAA earlier this year. In an article from Autelrobotics, titled The Complete Guide to Drones for Real Estate, author Andrew Hansen highlights some impressive statistics. He writes,

“Annual commercial drone sales are expected to reach 2.5 million units in 2017, an increase of more than 300 percent over 2016 estimates. Real estate is projected to be one of the largest industries to capitalize on drone technology, as experts predict it will account for 22 percent of total commercial drone use by 2020.”

As you already know, listing photos and videos are becoming an increasingly important part of connecting with potential buyers. Buyers today want as much information about a home as possible before they step foot through the door. It’s your job as a real estate agent to collect and present them with that information. This article will help you understand what you need to do to invest in drone technology as a real estate agent in 2017.

  1. Buyers Still Want Big Houses. Despite the popularity of the tiny house movement in some communities around the country, buyers still want big houses. In another article from the New York Times titled, Houses Keep Getting Bigger, Even as Families Get Smaller, writer Damon Darlin shares new statistics from the Census Bureau’s annual survey of American housing. Here’s one chart from the article that shows the increase in average square footage of new homes over time:

The article includes a handful of other helpful charts and information that can help you better understand what homebuyers will be looking for in 2017.

  1. More Millennials Will Buy. It’s taking them longer than other generations, but millennials want to and are starting to buy homes. To understand their challenges and reservations, it might be helpful to read through a USA Today article by Hadley Malcolm titled, To Buy or Not to Buy a Home? In the article, Malcolm presents information on student loan debt and the impact it is having on the ability for young people to buy. The availability of affordable homes is also an issue in some areas. This article is definitely worth reading if you’re at all interested in trying to sell more homes to millennials in the next year.
  2. Suburbs Will Still Be Big. The final trend worth looking into is this: suburbs still matter. Surprisingly enough, a lot of millennials are looking to suburbs rather than major cities when buying their first homes. This article from Realtor.com and this article from Consumer Reports both describe why the suburbs are attractive to more and more millennials. From these articles you can also understand how to pitch suburbs in ways that will appeal to your millennial clients.

Marketing Your Real Estate Business

Online marketing is becoming increasingly important part of building a profitable real estate business. It’s not enough to have a website or simply participate on social media sites like Facebook and Twitter. You have to pay to play. If marketing wasn’t a big focus for you in 2016, here are 4 areas worth investing in next year:

  1. Content Marketing. Your prospective buyers aren’t just looking for their next house. Their looking for a resource that can help them make the right decision. They could search Google and land on a random article about first-time homebuyers…or they could land on your blog—which would you prefer?

Content marketing allows you to leverage yourself as an influencer and a value-provider. It can help you differentiate from other agents who are just looking to sell, sell, sell. If you’re looking to form authentic relationships with people (which we all know is more beneficial to your business in the long run), content marketing is worth investing in. To get started, read our blog post on content marketing. It’s titled, Content Marketing for Real Estate: 7 Tips for Getting Real ROI, and offers a ton of actionable tips that you can put into action within the first few weeks of the new year.

  1. Video Marketing. Video marketing will also play a big role in 2017. As I mentioned earlier in this post, visual content is more important than ever. Potential buyers don’t want to go into a home tour blind—they want to have an idea of what to expect ahead of time. That’s where video marketing comes into play.

You can also use video to strengthen your personal brand, provide more value (see content marketing above), and leverage yourself as an influencer in your community. If you’re looking for video ideas to try in 2017, check out the 15 Essential Marketing Videos Every Real Estate Agent Should Create blog post from Paradym. It’s full of great ideas and examples that you can try next year.

  1. Social Advertising. Participating on social media sites like Facebook and Twitter is great, but if you really want to get any sort of ROI from your efforts, you have to be willing to spend some marketing dollars setting up and launching social ads. Facebook is a great place to start if you’ve never done any sort of advertising in the past on any social media sites.

To learn more about how to get started, read Facebook Ads for Real Estate: The Why and How of Getting (REAL) Leads from Carrot. It provides a great interview and offers a wide variety of examples that can help you understand how to leverage Facebook ads for your real estate business in the coming months.

  1. Email Marketing. If you want to build and nurture relationships with customers and potential buyers, email is one tool you should be using. Unlike social media and blogging, email marketing offers the most direct form of communication you can get, aside from picking up the phone and calling the people on your list.

You probably send emails to customers, but have you taken the time to think about how to insert more marketing strategy into your emails? If not, check out this handy quick guide from Constant Contact titled, How to Create a Real Estate Email Marketing Strategy.

Building Relationships with Customers

In real estate, you’re nowhere without happy customers who are willing to tell their friends, family members, and coworkers about you. To be a successful agent in 2017, you can’t just sell houses—you have to build and nurture relationships with people. Here are three customer-related areas that you should focus more on in 2017:

  1. Boosting Happiness. As you put your strategy in place for 2017, it’s important to reflect back on how you approached customer interactions and customer happiness over the past 12 months. Spend some time thinking about both the positive and negative experiences, and think about how to improve over the next 12 months.

If you’re looking for a few good recommendations, explore the 23 Proven Ways To Boost Customer Satisfaction blog post from When I Work. In it, you’ll find plenty of actionable tips on how to be more proactive when it comes to keeping customers happy—even long after you’ve helped them buy or sell their house. 

  1. Driving Word-of-Mouth. In 2017, you should also be investing more marketing dollars into delighting customers with gifts whenever you help them close on a new house. It’s one of the best and easiest ways to drive word-of-mouth advertising and customer referrals for your business. Giving gifts to clients doesn’t mean breaking the bank—there are plenty of simple ideas you can test for your business next year. For ideas, check out the 25 Brilliant Closing Gift Ideas for Homebuyerspost from our blog. 
  2. Providing Value. I mentioned it a few times in this post already, but in order to sell more homes in 2017, you have to be willing to invest the time and energy into leveraging yourself as a valuable resource in the minds of your customers. The easiest way to do this is by developing original content that you can share on your blog, in your emails, and across your social media channels.

Resource #6 above will help you understand how to get more ROI from content marketing, but if you’re just looking for ideas about what to write about, start with the 40+ Winning Real Estate Blog Ideas for Agents article from our blog. It will give you the ideas you need in order to start developing original, memorable value for your prospective buyers. 

Tools & Technology

Before diving into the New Year, you should also spend some time reading up on all the latest tools and technology that can help make you a more effective and attractive real estate agent. Here are 3 resources worth reading before January:

  1. Smart Home Gadgets. Smart home gadgets were big in 2016, and they’re only going to be bigger in 2017. As a real estate agent, it’s beneficial to spend time understanding what options exist and what potential buyers might be looking for when it comes to smart home gadgets. For a quick overview on the products that currently exist in the market, read The Quick Guide to Smart Home Technology in 2016from the HomeSpotter blog. 
  2. Productivity Tools. If you felt like you spent way too much time managing your business and not nearly enough time talking to prospects and closing deals, you need to invest in some tools that can help you automate tasks and become more productive. Not sure what tools are out there or where to start? Explore the 25 Best Productivity Tools for Real Estate Agents. It offers apps and tools that can help you with the following areas: Organization, Communication, Marketing, and Business Management. 
  3. Virtual Reality. One final technology tool that’s worth paying attention to in 2017: virtual reality. Although the technology as a whole is still in what most consider its infancy, it’s making huge strides and creating big opportunities for businesses across numerous industries—real estate included. To learn more about how virtual reality could impact the future of real estate and homebuying, read the New York Times article by Jennifer Miller titled, A New Dimension in Home Buying: Virtual Reality

©2015 HomeSpotter

BC Home Owner Mortgage & Equity Partnership Program

Tuesday, December 27th, 2016

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As discussed a month ago, Christy Clark has just announced the details regarding a home owners down payment matching program coming January 2017 to help our first time buyers. We are pumped as the government anticipates this will help an estimated 42,000 families over the next 3 years #BCFIRST

Under the program, the BC government will match down payment funds for eligible first-time buyers up to $37,500 with a 25-year term second mortgage.

As an example, a buyer purchasing a $500,000 home can put down 5% using $12,500 of their own funds and $12,500 from the BC Home Partnership Program. No payments are required on the second mortgage and no interest will accrue until the sixth year of the mortgage term. The total amount of matched funds will not exceed 5% of the purchase price.

Before all previous home buyers get too upset that they were not eligible please remember this will only continue to drive your home prices up further. This helps all BC home owners significantly.

Buyers must:
- Reside in the home they are purchasing
- Be a first-time homebuyer
- Be a Canadian citizen or permanent resident for 5 years
- Have resided in BC for at least one year
- Have a combined gross income of $150,000 or less
- Have at least half of the minimum down payment required to purchase (2.5% down payment from self for 5% total)
- Be purchasing a property under $750,000
- Must live in the property for first five years (to be eligible for interest free loan)

To be eligible, buyers much be pre-qualifed for an insured high-ratio mortgage (mortgage down payment is less than 20% of the home price). On completion of the sale, program funds will be advanced and the loan will be registered as a second mortgage on the property’s title. 

Home owners can repay the second mortgage to the Partnership Program part or in full at any time in the first five years with no penalty. After five years the interest will start to accrue and home owners will need to start making monthly payments of principle and interest. The interest rate will be outlined in the conditional loan approval letter.

The program starts Jan 16th, 2017 and is will run for three years until March 31, 2020.

Congratulations first-timer buyers and current home owners, all the best in 2017.

 

To start a quick application please visit http://iwanttoown.ca/contact-us/
Are you eligible? Find out here – https://homeownerservices.bchousing.org/housing-assistance/bc-home-partnership/bc-home-partnership-calculator.html

 

Ottawa eyes new drone rules

Monday, December 26th, 2016

LARRY PYNN
The Province

Transport Canada launched a record 118 investigations into the illegal use of drones this year across the country, including 18 in B.C.

The federal department also issued a record 16 fines for drone-related violations in Canada to Dec. 1 this year — half of those in B.C. There were just five fines issued in 2015, three of those in this region.

Among the B.C. enforcement actions, Moves Media Ltd., a Vancouver video production company, was fined $5,000 for operating a drone — also known as an unmanned air vehicle, or UAV — contrary to its Special Flight Operations Certificate issued by Transport Canada.

The federal government also issued about 4,300 such certificates for commercial or research purposes this year before Dec. 1, up from the 2,480 in 2015 and 1,672 issued in 2014.

Penalties against individuals for illegal use of drones were closer to $1,000, although violators may get off with a warning.

The numbers reflect how fast the activity is growing and hint at Ottawa’s difficulty in keeping pace.

“We’ve seen a tremendous increase,” said Aaron McCrorie, director-general of civil aviation for Transport Canada. “Most of it is legitimate, but we’re also seeing an increase in the number of incidents that cause safety concerns.”

McCrorie said that the federal government is expecting to introduce new rules in 2017 to guard against crashes and to protect people on the ground.

He says the current regulations “haven’t kept up with technology.

“… We need to modernize the rules, to deal with the growing safety risk around airports and built-up areas where they shouldn’t be.”

One of the new regulations may require persons flying drones under 25 kilograms to pay a fee to complete an online course — similar to anyone wanting to obtain a boating licence.

Other regulations proposed by Ottawa include the requirement to mark and register drones.

© 2016 Postmedia Network Inc.