Archive for June, 2017

CMHC to give Ottawa a special $4 billion dividend, has too much capital on its books

Friday, June 30th, 2017

CMHC paying $4B dividend to government

Garry Marr
The Vancouver Sun

Canada Mortgage and Housing Corp., is paying the federal government a special $4 billion dividend, a move the Crown corporation says is driven by the fact it has more cash than it needs to back its obligations.

In May, the Crown corporation, said it was implementing a “dividend framework” in the event that actual capital exceeded its capital target even though historically CMHC had retained all of its net income as capital since its creation in 1946. The first quarter dividend was $145 million.

“CMHC’s mortgage loan insurance and securitization businesses operate on a commercial basis and are expected to generate a reasonable return for the government,” the Crown corporation said in a release.

The one-time dividend will “align CMHC’s actual capital with its capital holding target” and be paid in instalments over a period not to exceed two years, the Crown corporation said.

Canadians with less than a 20 per cent downpayment on a home must get mortgage default insurance which is designed to protect financial institutions for any shortfall in the event a consumer defaults on their loan. CMHC is the largest mortgage default provider in the country and is ultimately 100 per cent backed by the federal government should it fail.

There are two private mortgage default providers in Canada, Canada Guaranty and Genworth Financial, both of which are 90 per cent backed by the federal government.

Rob McLister, the founder of, said CMHC has been “hoarding” capital. “The government is requiring CMHC to not keep that excess capital on its balance sheet. Instead, Ottawa wants it explicitly paid out to taxpayers,” said McLister, adding the Crown corporation’s earnings were already consolidated in the government’s books so they say this won’t impact the deficit.

The move comes has CMHC has been hiking premiums for consumers. It has generally led the way in the marketplace and Canada Guaranty and Genworth have usually followed. In January, the Crown corporation hiked premiums across the board and consumers with a loan-to-value up to and including 95 per cent now pay a fee of four per cent of their total loan which was up from 3.6 per cent. It was the third premium hike in three years.

“As a Crown corporation, CMHC is the only mortgage insurer whose proceeds benefit all Canadians. The special dividend returns excess capital to the Government of Canada while ensuring enough capital is retained for the risks we’ve assumed, said Wojo Zielonka, chief financial officer and senior vice-president of capital markets for CMHC, in a statement.

The federal government welcomed the cash from the Crown corporation. “CMHC’s special $4 billion dividend is a sign of how well the Crown Corporation is managing its mortgage loan insurance and securitization businesses. By sending excess funds to the Government CMHC is abiding by good governance principles,” said Bill Morneau, the finance minister, in a statement.

CMHC said it continues to “hold capital in line with its risk profile” and is meeting regulatory capital requirements set out by the Office of the Superintendent of Financial Institutions. CMHC reported in its first quarter results that it had total assets of almost $266.2 billion and liabilities of almost $244.8 billion.

In January, CMHC chalked up the increase in premiums to capital requirements of OSFI. “Capital requirements are an important factor in determining mortgage insurance premiums. The changes reflect OSFI’s new capital requirements that came into effect on January 1st of this year that require mortgage insurers to hold additional capital,” the Crown corporation said at the time.

© 2017 Financial Post

Housing affordability has hit astounding lows says RBC

Friday, June 30th, 2017

Steve Randall
Canadian Real Estate Wealth

A typical household in Toronto would need to spend 72 per cent of their income on an average priced house.

The staggering statistic is highlighted in a new report from RBC which says affordability worsened in the first quarter of 2017 to its lowest point ever and brings the GTA close to surpassing Vancouver for low affordability.

The national index was at 45.9 per cent, the second highest level since 1990, driven by the Toronto surge and moderate increases in some other regions.

“Only once since 1990 have Canadian households had to spend this much on ownership costs, clearly underscoring the degree to which rapidly rising prices have squeezed housing affordability over the past year,” said Craig Wright, senior vice-president and chief economist, RBC.

Vancouver remains the most unaffordable market in Canada with an affordability index of 79.7 per cent but that has eased from 80.9 per cent in the previous quarter.

Outside of BC and Ontario, most markets are stable or showing only moderate rises while the Prairies are showing some improvement in affordability. The regional data is available here.

The sharp decline in affordability in Toronto will be closely monitored to assess the impact of the Ontario Fair Housing Plan, but that is likely to take some time.

“Toronto’s housing market completely let go of any semblance of rationality in the first quarter,” said Craig Wright, senior vice-president and chief economist, RBC. “We see Ontario’s Fair Housing Plan as a way to bring some sanity back to the GTA housing market, although the impact on affordability may take up to two or three quarters to be felt and may last only for a period of time.”

Copyright © 2017 Key Media Pty Ltd

Ontario proposes banning real estate agents from representing seller and buyer

Thursday, June 29th, 2017

Allison Jones
Canadian Real Estate Wealth

TORONTO, Ontario is proposing banning the practice of double ending, in which a real estate agent represents both a buyer and a seller in a transaction.

The province’s Liberal government announced a 16-point housing plan earlier this year, with centrepiece planks of a 15 per cent foreign buyer tax and expanded rent controls.

Another plank was reviewing the rules for real estate agents to ensure consumers are fairly represented. The government has now published several proposals for changes to real estate agent rules and penalties, and is seeking public consultation on them.

One of the proposals is to ban _ with some limited exceptions _ agents from representing both the buyer and seller or more than one potential buyer in a trade.

“The seller will want the highest possible price and most favourable terms they can get, and the buyer will want to pay the lowest price or negotiate the most favourable terms possible,” a government discussion paper says.

“These competing interests may make it challenging for registrants involved in these types of transactions to meet their obligations to their clients or to be able to advocate effectively on behalf of either party.”

The Ontario Real Estate Association welcomed the review since the governing legislation dates back to 2002, said CEO Tim Hudak.

“The world of real estate has changed tremendously in the last 15 years _ much higher home prices, more sophisticated consumers, greater technology,” he said.

Consumers have raised concerns that the financial incentives in double-ended deals might lead to agents engaging in unethical behaviour, the government says in its paper.

“This divided loyalty and the associated risks may leave some consumers vulnerable even when written consent is obtained and the necessary disclosures…have been made.”

Currently, double ending is allowed if all of the clients the agent is representing give their consent to the arrangement in writing.

Under the government’s proposed changes, different agents from the same brokerage could represent the buyer and the seller in a transaction. The “limited exceptions” to the double-ending ban would be if there is a private arrangement between family members or in a small market where there are very few agents.

Consumer Services Minister Tracy MacCharles says the government wants to make sure that Ontario homebuyers are protected and not being harmed by unethical real estate practices.

“The practice of multiple representation or ‘double ending’ puts would-be homeowners at risk of unethical behaviour,” MacCharles said Wednesday.

Ontario says its proposed new model is similar to how British Columbia, Alberta, Nova Scotia and Manitoba approach multiple representation in real estate deals. It is looking to those jurisdictions to learn best practices.

OREA would also like to see the government address several other areas, Hudak said, including so-called escalation clauses, which say a buyer will top the highest competing offer, up to a certain amount. More common in the U.S., they have recently been popping up in Ontario, Hudak said.

“An unethical person could immediately cause you to go to the highest price you’re willing to pay,” Hudak said. “In order for a clause to work you’d have to find out what other people are bidding and that currently breaks the code of ethics to protect consumers’ privacy.”

Specialty licences for realtors should also be considered, Hudak said. That way, if an agent claims they are an expert in commercial or condo or cottage properties, they should be able to obtain a designation to back that up, he said.

Realtors have also been pushing for the ability to form personal corporations. There is already a bill before the legislature that would allow this that has passed second reading.

The government is also considering increasing the maximum fine for salespeople and brokers who violate a code of ethics from $25,000 to $50,000 and $100,000 for brokerages.

A second and broader phase of reviewing Ontario real estate rules will start in the spring of 2018.

Copyright © 2017 Key Media Pty Ltd

2.8% of Metro Homes Bought by Foreign Buyers since Tax Launch

Thursday, June 29th, 2017

Joannah Connolly

Just 2.8% of home sales in Metro Vancouver went to overseas buyers between August 2, 2016 – the date of the foreign buyer tax launch – and May 31, 2017, according to data released June 28 by finance minister Mike de Jong.

According to de Jong’s June 2017 fiscal update, the proportion of Metro Vancouver sales involving foreign nationals fell from 16.5% in June 2016 – when the BC government started collecting foreign buyer data – to less than 4% in January 2017.

Only 1,375 Metro Vancouver homes out of 48,713 sold between August 2 and May 31 went to overseas buyers, who were subject to the new foreign buyer tax. Those sales were still enough to raise $102 million in revenues for the provincial coffers in the 2016/17 fiscal year.

Richmond saw the biggest total decline in share of foreign buyers, with 27.2% of total sales in June 2016, falling to 1.3% in August 2016. However, that city has also seen the biggest resurgence in overseas buyers this year, at around 10% each month since January.

The ministry’s findings jive reasonably well with a recent study released by the Real Estate Board of Greater Vancouver, which compiled monthly agent survey data that suggested foreign nationals made up just 2.3% of agent’s buyers over the past year.

Despite the low proportions of overseas buyers in the current Metro Vancouver market, home prices continue to rise. The benchmark price of a composite home (all home types) in the region, as of May 2017, up nearly 9% compared with a year ago and closing in on $1 million, now at $967,500.

The positively spun foreign buyer data comes as the BC Liberals attempt to cling on to power, with their minority government in serious danger of losing its tenuous grip in today’s (June 29) confidence vote at the BC Legislature.

© 2017

Canada’s long ride with rock-bottom interest rates appears to be ending

Thursday, June 29th, 2017

Days of low rates could be ending

Drew Hasselback
The Vancouver Sun

Canada’s long ride with rock bottom interest rates appears to be coming to an end.

Stephen Poloz, governor of the Bank of Canada, has dropped a big hint that for the first time in seven years, the bank will be pushing Canadian interest rates higher.

The Canadian dollar rallied as high as 76.71 U.S. cents on Wednesday, its highest level against the U.S. dollar since February.

In an interview on CNBC, Poloz said two interest rate cuts the bank announced in 2015 to help Canada grapple with a drop in oil prices have done their job. Canada now has one of the fastest growing economies in the G7.

Speaking from a meeting of top central bankers in Portugal, Poloz said it may be time to remove the stimulus. That could happen in less than two weeks, as the bank’s next regularly scheduled interest rate decision is July 12.

“It does look as though those cuts have done their job. We’re just approaching a new interest rate decision, so I don’t want to prejudge that, but certainly we need to be at least considering that whole situation now that capacity — excess capacity — is being used up steadily,” Poloz said.

Benjamin Reitzes, Canadian rates and macro strategist with BMO Capital Markets in Toronto, said this means a rate hike is coming on July 12. “He’s not going to give it away, but that’s a pretty strong and clear-cut signal that a July rate hike is very much on the table.”

The last time the bank actually pushed rates upward was 2010, when it guided its benchmark rate up to 1.0 per cent as Canada pulled out of the 2008-09 financial crisis. The rate remained at 1.0 per cent until early 2015, when the bank pulled its target down to 0.5 per cent to deal with the oil shock.

The overnight target rate is just 25 basis points above the historic low of 0.25 per cent that was in place after the 2008-09 crisis.

The jump in the Canadian dollar on Wednesday means the market thinks a rate hike is on its way soon. The Canadian dollar rises as investors from abroad move their money into Canada to benefit from the rising interest rates.

Higher rates seem to be a global trend. The U.S. Federal Reserve has already begun gradually raising its rate target. The Bank of England is starting to think about making its own move, while the European Central Bank has been talking about moving away from quantitative easing.

In Canada, a strong economy and a low jobless rate has led many private sector economists to note that Canada is due for some interest rate hikes.

In fact, anticipation of rate hikes has made the Canadian dollar the best performing currency in the Group of 10. The remarks by Poloz on Tuesday show that the bank is catching up with the market outlook.

“The Poloz comments buttress the change in tone that we’ve seen from the bank over the past month,” said Bipan Rai, a foreignexchange and macro strategist at CIBC.

Earlier this month, Poloz and senior deputy governor Carolyn Wilkins made public remarks that pointed in the direction of higher rates.

The Poloz interview on Tuesday strongly suggests that the bank has caught up with the bullish forecasts we’ve been seeing from the private sector.

The bank now sees the Canadian economy gathering enough steam to absorb higher interest rates. What’s more, Poloz said he is comfortable with oil prices in the range of US$40 to US$50 a barrel. And while inflation remains low, Poloz said there is enough momentum in the economy for it to pick up steam down the road.

“At long last, the Bank of Canada has acknowledged that the economy is in good shape and that the worst of the oil shock has passed, something we highlighted as early as February,” Reitzes said. “Over the past 10 months, GDP has grown at the best pace since 2010, and job gains have been the fastest since 2012. That’s driven the jobless rate to a record low in Central Canada.”

BMO expects the bank to boost its target rate by 25 basis points to 0.75 per cent on July 12, followed by a second 25-basis point hike to 1.0 per cent in January.

While it’s too early to make a firm call, if the Bank of Canada continues to sound hawkish, BMO expects rates could rise by another 50 to 75 basis points next year.

© 2017 Financial Post

New bylaws must be filed as approved by strata

Thursday, June 29th, 2017

New owner discovers change to bylaws

Tony Gioventu
The Province

Dear Tony:

Our strata of 48 townhouses passed new bylaws in April this year. One of our council members had agreed to file the bylaws that were issued with the notice, and properly passed by a three-quarter vote resolution with no amendments.

However, a new buyer has just moved in and produced a set of bylaws that have a number of changes from what we had passed. When challenged, the council member had indicated she chose to consult with a notary on the bylaws before they were filed and made a number of amendments and what she thought were corrections, then filed the bylaws with her changes.

For example, we adopted a bylaw that limited the number of pets to one cat or one dog. The bylaws now say one cat and one dog or additional pets as approved by council. We contacted the Land Title Registry, which has indicated it cannot undo what someone has filed on behalf of a strata corporation and advised we obtain legal advice on the procedures. We now have eight owners away for the summer and are at a stalemate for next steps.

Conroy P., Summerland


The Land Title Registry office is correct. It cannot file a correction. It is simply a filing office, not a regulator. When a person files a bylaw amendment in the Land Title Registry, they are also filing a Form I Certificate of the Strata Corporation.

The form indicates they have filed the bylaws approved at a general meeting. However, in your case, any such declaration is incorrect. The person who filed the bylaws has misrepresented the information and placed themselves at risk for having potentially falsified the document and the bylaws. Whatever bylaws a strata corporation approves at a general meeting, the strata corporation has an obligation to file. No corrections, no amendments, no changes.

The best and easiest solution is for the strata corporation to convene a new general meeting, vote on the original bylaws and, once ratified, instruct their lawyer’s office to file the bylaws as passed and repeal the incorrect bylaws that were filed.

If you cannot reach a three-quarter vote to repeal the incorrect bylaws, an owner or tenant may make an application to the civil resolution tribunal, commence an arbitration or file an application with the Supreme Court of B.C. to order the bylaws as unenforceable as they were not the bylaws approved by the owners at a general meeting.

This also places your strata corporation in an extremely awkward situation in relationship to your current bylaws and any measure of enforcement. The new buyer relies upon the bylaws filed in the Land Title Registry when they make their purchase, even though your bylaws are significantly different.

Your strata corporation might also wish to consider a complaint against the notary if they recommended any changes as the writing of bylaws and constitutions for a strata is a practise of law in B.C.

© Copyright Times Colonist

Park Boulevard 9887 Whalley Boulevard Surrey 419 homes in a 41-storey tower by Concord Pacific Developments

Thursday, June 29th, 2017

Park Boulevard a striking addition to Surrey

Mary Frances Hill
The Province

Park Boulevard


Where: 9887 Whalley Boulevard, Surrey

What: 419 homes in a 41-storey tower

Residence sizes and prices: One-bed from approximately 529 sq. ft.; two-bed from approximately 647 sq. ft., three-bed from approximately1,015 sq. ft. Prices available on request

Developer and builder: Concord Pacific Developments Inc.

Sales centre address: 9908 King George Blvd., Surrey (next to King George SkyTrain Station)
Hours: 11:30 a.m. — 5:30 p.m., daily

Telephone: 604-583-9866

At 41-storeys, the Park Boulevard tower will be a striking addition to Surrey. When the SkyTrain rolls up, steps from the Concord Pacific highrise, its arrival will cue a wave of colourful lights to rise up the side of the building.

Indoors, however, the design team from Liv Interiors also adds some visual drama. In the show home, their use of textures, lighting and moody monochromatic hues create a cocoon of warmth, vintage luxe, and privacy and personality.
“Although the exterior lighting is carefully designed to not affect the residents, we always consider creating spaces that promote calmness in residential interior design, especially in a busy city like Vancouver and the Tri Cities,” says Olivia Lam, the principal of Liv Interiors, which worked with Concord Pacific on the project.  “Home is where you come back to unwind at the end of the day, and it should be personalized to speak to your own interests and personality.”
While the designers hold to a principle of calm, they still manage to lay on the bold visual drama, specifically in the bedroom, where a gold velvet sheen fabric covers a headboard and spans a wall.

 “We created a layer of light behind the headboard…to highlight the silky hand of the opulent velvet wall panels, offering a luxurious visual esthetic,” Lam says.
In a living room, a Tiffany-blue tufted sofa stands out in a bright white room. Both furnishings are arresting pieces of luxury and warmth that appeals to many as ‘vintage luxe.’
“Vintage luxe is making a comeback. Velvet finishes in unique colours can immediately make an impression,” she adds. “Those rich fabrics and uncommon hues that absorb and reflect light and textural elements in finishes are extremely important, in the way they absorb and reflect light.”
In a kitchen, Liv Interiors’ designers covered cabinets in the same grain for a unified look. One simple finish can create drama, Lam says.

 “Wood is a very strong and impressionable element, and using too many different types of grains and colours will result in a chaotic look.”
Light and contrasting dark shades adds more depth, particularly in the study area where strategic lighting adds dimension to wall shelving. Liv Interiors’ team created its own text-based artwork in this room in a bold illuminated casing.
“Much like the ways the designers approach the layering of furniture and textiles, they aim for “dramatic layers of light,” she says. “When you create visual contrast in a room, it pops, it grabs your attention, and it says ‘look at me!’”

© 2017 Postmedia Network Inc.

Vancouver’s Inventory of completed, unsold new multi-family homes plummets to almost zero

Thursday, June 29th, 2017

Region?s Stock of Move-In-Ready New Homes ?Falls Off a Cliff?

Joannah Connolly

Inventory of completed, unsold new multi-family homes plummets to almost zero, with not one finished townhouse available in Vancouver proper, says report

New concrete condos told a similar story, with standing inventory reaching a record low of 11 units in the first quarter of 2017 ? compared with more than 700 units in Q4 2013

Standing inventory of new, unsold wood-frame condominiums also hit all-time lows, at just four units across the whole of Metro Vancouver. This is down from 164 units in the same quarter last year and down from around 1,000 units in Q1 2014

The available stock of new multi-family homes that are finished and unsold has “fallen off a cliff” and is now at record lows, according to a report issued May 29 by the Urban Development Institute (UDI) Pacific Region.

UDI’s first-quarter State of the Market 2017 Research Report, prepared by research group Urban Analytics, examines the supply of new housing – including housing starts, inventory (available units that are built or under construction) and standing inventory (completed and unsold units) – across Metro Vancouver.

It found that townhomes are extremely scarce, with zero completed units available for purchase in Vancouver proper, only seven new townhouses available in the Inner Metro region, and nine in the Outer Metro region. 

The report said that housing starts are not a good measurement of supply, because at least 80% of these are pre-sold before they’re built to meet financing requirements. “While pre-sales in various forms of construction were available for purchase as part of overall ‘inventory’, that doesn’t help someone who’s just moved here for a new job with a family, and needs a new home today,” observed the UDI.

Anne McMullin, UDI president and CEO, said, “What’s causing the supply shortage is the restrictive single-family home neighborhood zoning on 85% of our residential land base, available to a select few high income earners who can buy there. That keeps out young families, middle income earners and renters, who can’t afford single-family homes.

“We clearly need a regional housing strategy with more homes for more people,” she added. “That means more high-rise apartments along rapid transit corridors and more townhomes, rowhomes, multi-family low-rises, duplexes and laneway homes in traditional single-family neighborhoods.”

However, not everyone agrees that increasing supply will help ease housing shortages. Frank O’Brien, editor of’s sister newspaper Western Investor, said on the Real Estate Therapist radio show on the May 20 edition, “We cannot build enough supply to match demand from speculators, offshore and domestic. If you build more and more higher-density housing, you’ll just drive up the price of land. Look at Hong Kong – it has densities that would give Vancouverites heart attacks, but it has among the highest real estate prices in the world. The only way to reduce home prices is to ease demand – and you can’t ease demand. Vancouver’s high real estate prices will continue.”

© 2017

Canada July Rate Hike Odds Jump After Poloz Restates Bias

Wednesday, June 28th, 2017

Theophilos Argitis and Maciej Onoszko
Canadian Real Estate Wealth

The Canadian dollar rallied to a four-month high and investors ramped up bets for a rate increase as early as next month after Bank of Canada Governor Stephen Poloz reiterated the central bank may be considering higher rates.

The nation’s currency jumped 1 percent to C$1.3072 per U.S. dollar at 11:01 a.m. in Toronto, the strongest level since February. The loonie traded at 76.5 U.S. cents. Swaps trading suggests investors are placing a 69 percent chance of a rate hike at the bank’s July 12 rate decision, up from 39 percent Tuesday.

“The Poloz comments buttress the change in tone that we’ve seen from the Bank over the past month,” said Bipan Rai, Toronto-based senior foreign-exchange and macro strategist at Canadian Imperial Bank of Commerce. “There’s still some speculative shorts out there are being squeezed as a result.”

The Canadian dollar is the best performing Group-of-10 currency this month after the central bank unexpectedly adopted a tightening bias two weeks ago with suggestions that stimulus associated with two rate cuts in 2015 may need to be withdrawn. Poloz used similar language in an interview with CNBC.

“Rates are of course extraordinarily low,” Poloz said, adding the bank cut rates by 50 basis points in 2015 to counteract the effects of the oil price shock. “It does look as though those cuts have done their job,” he said, according to a transcript of the interview. “But we’re just approaching a new interest rate decision so I don’t want to prejudge. But certainly we need to be at least considering that whole situation now that the excess capacity is being used up steadily.”

Bank of Montreal is now calling for a rate increase in July as Poloz’s comments “were the final straw” prompting the shift, Benjamin Reitzes, Canadian rates and macro strategist at the bank, wrote in a note on Wednesday. The Bank of Canada’s hasn’t raised rates since 2010.

The comments from the central bank governor extended a sell-off in Canadian government debt. The two-year note fell for a third day, pushing the yield up to 1.04 percent, the highest since January 2015. The rate on 10-year securities added seven basis points to 1.64 percent, increasing 22 basis points this month, the steepest increase since November.
CIBC’s Rai doesn’t expect the bank to raise rates next month.

“The market is moving to price in 55-60 percent chance that the bank moves in July but the odds should be more skewed towards 30 percent,” he said. “It’s unlikely that the Bank of Canada will want to front-run second-quarter growth and strengthen the Canadian dollar further.”

Copyright © 2017 Key Media Pty Ltd

Trump Hotel Owner in Toronto Reaches Deal to Remove Trump Brand

Tuesday, June 27th, 2017

Katia Dmitrieva

The Trump International Hotel & Tower in Toronto will no longer be branded with U.S. President Donald Trump’s name under a deal struck with the owner of the property.

JCF Capital ULC, the closely held U.S. firm that owns the building in the city’s downtown business district, reached a buyout deal to exit the contracts with the Trump Organization’s hotel and management firms early, the companies said Tuesday in a statement. Signage may be removed from the 65-story tower as soon as Aug. 1, according to a person with knowledge of the matter. No breakup fee was disclosed.

The hotel will likely be operated under Marriott International Inc.’s St. Regis brand, people familiar with the plan said earlier this month.

The agreement to remove the Trump brand marks the first step toward revamping the property, which has faced a history of construction delays and lawsuits. Most recently, it’s been a site for protests against the U.S. president’s comments disparaging women, Mexicans, and Muslims, even though his company has no ownership stake in the property.

JCF Capital acquired the tower with the Trump brand and agreements in place last year from former owner Talon International Development Corp., the developer run by Russian-Canadian billionaire Alex Shnaider. Since then, JCF has been in talks with hotel chains and the Trump Organization to finalize an operating plan.

Copyright © 2017 Key Media Pty Ltd