However, the total dollar volume of commercial property sales remained about the same, year over year, at $3.90 billion in the last quarter, only a 0.9 per cent decrease from $3.93 billion in Q3 2017.

Evan Duggan
The Vancouver Sun

Commercial real estate sales in the region fell in the third quarter of this year by 19.5 per cent, when compared to the same quarter last year, according to data from Commercial Edge, a commercial real estate system operated by the REBGV.

There were 565 commercial real estate sales in the Lower Mainland in Q3 2018, down from 702 sales in Q3 2017.

However, the total dollar volume of commercial property sales remained about the same, year over year, at $3.90 billion in the last quarter, only a 0.9 per cent decrease from $3.93 billion in Q3 2017.

“We expected a slow-down, but not to this degree,” said Bal Atwal, a principal with Avison Young in Vancouver who specializes in investment properties and development sites.

“Many investors are still sitting on the sidelines to see to how things shake out, possibly expecting pricing may come down further, especially on land,” he said.

“Pricing has come down, but the sales volumes have been impacted due to buyers remaining cautious,” he said. “We’re in a bit of a wait-and-see period right now.”

Atwal remained optimistic about the economic fundamentals of the local commercial market. “We need to remember that Vancouver is still a very tight market,” he said. “I don’t think pricing will adjust down much further, if at all, but currently that is essentially the state of the market.”

While sales figures are down, the overall dollar volumes are nearly on par with the five-year average, said Charlie Hughes, an investment broker with Colliers International in Vancouver, who focuses on land and apartment building deals.

“There is still close to $4 billion in transactions this year, which is really a tremendous amount of capital,” he said.

“I would just say that looking at the number of commercial transactions doesn’t really do the market justice because there were a number of transactions this year that were quite large,” Hughes said. “So, when you’re gauging investor sentiment, I think it’s more accurate and fair to look at the dollar volume.”

He said the market is on track for about $5 billion in deals for 2018.

“I would say all asset classes on the commercial side are still in strong demand,” Hughes said. “There hasn’t been the slow down and the pause that you see in some of the detached housing markets and some of the residential side. The commercial side of things is still going quite strong.”

Of all the asset classes, commercial land sales saw the largest decrease in sales, falling by nearly 35 per cent, from 305 deals in Q3, 2017 to 199 deals in Q3, 2018, the report said. Total commercial land sales totalled just over $2-billion in Q3, this year.

“Definitely the land market has seen a pullback from a year ago,” Hughes said. “(But) compared to the last five or 10 years. There were record setting years from 2015 through 2017 where the volume of land transactions grew exponentially almost.”

He said a pullback on the super-heated land market “was probably needed”.

Looking forward to 2019, Hughes said the investment market should remain relatively strong.

Investors who chase properties here look for low vacancy rates, a diverse economy, population growth and general stability, he said. Those things all appear to be in place despite rising interest rates, political uncertainty and the major ongoing trade war involving China and the U.S.

“2019 will be a pretty solid year, maybe not the frenzy of the last couple of years,” he said.

Atwal agreed. “The market has already started to stabilize and we’ve started to establish the floor for the next cycle, but it will still take a couple of months for buyers to come to that same realization,” he said. “There is no blood in the water.”

© 2018 Postmedia Network Inc.

CREA says home sales projected to fall in 2019

Canadian Real Estate Wealth

National home sales are projected to fall to a near decade low in 2019, as rising interest rates and strict mortgage stress-test rules continue to put a damper on homebuyer sentiment, according to the Canadian Real Estate Association.

The group, which represents more than 125,000 realtors, is projecting that home sales across the country will decline to the lowest point in nine years but stay little changed from 2018, falling only by 0.5 per cent to 456,200 units.

CREA is projecting that the national average price for a home sold through its multiple-listing service system will rise 1.7 per cent to $496,800 in 2019.

The association forecasts a rebound in sales activity in Ontario and continuing gains in Quebec. Sales were anticipated to fall next year in Alberta and British Columbia.

“In 2019, home sales activity and prices are expected to be held in check by recent policy changes from different levels of government, in addition to additional interest rate increases,” the group said in a forecast released Monday.

CREA has also revised down its projections for 2018, now saying that it expects national home sales will decline by 11.2 per cent to 458,200 units in 2018 _ the lowest level in five years.

The group says B.C. and Ontario will make up the majority of this year’s decline, while sales in Alberta, Saskatchewan, Manitoba and Newfoundland and Labrador will also fall to multi-year lows.

“The national forecast has been revised lower… as an anticipated rebound in sales in British Columbia has so far failed to materialize, the recovery in Ontario sales this summer has now run its course and sales activity in Alberta has edged lower. These developments were partially offset by stronger-than-expected sales activity in Quebec,” it said in the report.

The association noted that sales in Quebec and in the Maritimes, particularly New Brunswick, were still anticipated to remain “historically strong.”

National average home prices were slated to end this year down 4.2 per cent to $488,600 from 2017.

CREA attributed 2018’s price drop to a 2.6 per cent year over year decline in Ontario as fewer higher-price homes were put up for sale in Toronto, especially during the spring market, which often sees a price surge.

In Toronto, the decline in average home prices this year is stark in contrast because the housing market in Canada’s largest city had been “unusually strong” in 2017.

“As we look to 2019, the major battle lines seem fairly clearly drawn, with the market still supported by strong population growth on the one side, and challenging affordability (past price gains and rate rises) on the other,” said Doug Porter, chief economist at BMO Economics in an analyst note.

“While we expect sales activity to stabilize next year… we nevertheless anticipate that prices will slow even further to gains likely below that of inflation.”

Porter also pointed out that there were a lot of variances regionally in relation to average sales and prices.

For instance, the housing market in Ontario’s medium-sized cities continued to show strength, with both London and Windsor, Ont., posting double-digit gains in 2018. While smaller cities in Ontario, Quebec and Maritimes registered price gains that put that in a “healthy” balanced market.

Oil price declines have also wreaked havoc on housing prices in Western Canada, while the largest sales decline this year was in B.C., which has largely been attributed an increase in the foreign-buyers’ tax.

Meanwhile, in separate release of monthly sales data, CREA reported that home sales across the country fell for a third month in a row in November, as two of what had been the hottest markets, the Greater Toronto Area and the Greater Vancouver Area, reported lower activity.

Canadian home sales through its multiple listing service system dropped by 2.3 per cent last month compared with October as the number of transactions fell in more than half of all local markets.

Sales were down year over year in three-quarters of all local markets including the GTA, Hamilton-Burlington, Ont., region, B.C.’s Lower Mainland and Calgary.

CREA says the number of new listings also saw a decline, falling 3.3 per cent in November.

The drop came as the average price for a home sold last month dropped to $488,000, down 2.9 per cent compared with the same month a year ago. Excluding the Greater Toronto Area and the Greater Vancouver area, the average price of a sold home was just under $378,000.

“The decline in home ownership affordability caused by this year’s new mortgage stress-test remains very much in evidence,” said Gregory Klump, CREA’s chief economist in a statement.

“Despite supportive economic and demographic fundamentals, national home sales have begun trending lower. While national home sales were anticipated to recover in the wake of a large drop in activity earlier this year due to the introduction of the stress-test, the rebound appears to have run its course.”

The Candian Press

Copyright © 2018 Key Media Pty Ltd

What income you need to afford a Metro Vancouver detached house

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At Cedar Ridge, Port Moody location offers launch pad for outdoor enthusiasts

Michael Bernard
The Vancouver Sun

Cedar Ridge, Port Moody

Project location: 70 Seaview Drive, Port Moody

Project Scope: Twenty-eight three and four bedroom townhomes, ranging from 1,304 sq. ft. to 1,602 sq. ft. Forced air natural gas heating, roughed-in air conditioning, tankless hot water supply.

Price: Low $900,000s to $1.2 million

Developer:  Allaire Living and Headwater Living

Architect: Integra Architecture Inc., Vancouver

Interior Design: i3 Design, Vancouver

Sales Centre: 1a – 555 Clarke Dr., Coquitlam, B.C.

Centre’s Hours: Daily 12 noon to 5 p.m. (closed Thursday and Friday)

Sales Phone:  604.720.5357

Website: www.liveatcedarridge.ca

Completion Date:  Early 2020

Finding a niche in today’s highly competitive real estate market is no mean feat for today’s smaller size developer. But it’s a bonus when that developer finds that his housing product is fulfilling the needs of not one but two generations of homebuyers.

That’s the market sweet spot Marc Allaire has targeted in building Cedar Ridge, a collection of 28 three-storey three- and four- bedroom townhomes he is constructing in an area of Port Moody largely devoted previously to single-family homes.

 “We are building for young families looking to upgrade from a condo who have built up some equity in the last three or four years,” said Allaire, who has worked 35 years in the industry, including the last 11 years with his own company, Allaire Living. “We are also looking at downsizers who want to sell their single-family home but remain in the area but aren’t necessarily ready for condo living and still want their own garage.”

He adds to that mix, executive couples who want their own home but don’t want a single-family house.

While there are lots of condominiums out there, there are relatively few three- or four- bedroom townhomes available in the market place, he said.

Cedar Ridge, located on a sloping area of land at Seaview Place, is rendered in a West Coast contemporary style by the Vancouver firm of Integra Architecture Inc. whose principal, Duane Siegrist, makes liberal use of light and mid-brown natural colours to complement the timber and rock details emblematic of that genre.

The project is separated into four buildings to break down the massing and allow for light corridors through the development, he said, noting in his project rationale it has an added benefit. “The project features a central, naturally landscaped outdoor amenity which promotes socialization between the residents, creating a larger sense of community.”

The firm chose residential design materials that have a homelike quality but in a modern rather than a traditional application, he said. The materials and design have a more modern appeal to buyers who appreciate the look is not a “replicated heritage.”

 “The main design inspiration came from the large natural forest, and public park located just 300 metres east of our site,” he said, adding the look was successful. “Much of the public and the city authorities through the approval process were very happy with the design and how it fits into their neighbourhood.”

Cedar Ridge also has positioned itself a cut above other townhome complexes on a mechanical level, offering natural gas forced air heating through ducting—instead of more routine baseboard electrical heating, with an option to incorporate air conditioning as well. The developers also appealed to environmentally conscious buyers by making tankless hot-water a standard rather than an optional feature.

“Buyers are more knowledgeable today,” said Allaire. “They are taking a bit more time to decide and they are looking for features that are environmentally friendly, and looking at construction practices and materials that lower maintenance costs.”

“One thing we have seen is that the outdoor lifestyle is a big concern for people living in this area. They don’t want to worry about costs. They want minimum maintenance and time for their lives.”

Cedar Ridge is well located for this lifestyle, offering good access to transit (the West Coast Express and walking distance to the new Evergreen line) and a new nearby grocery store, and good schools and parks while being within a few minutes of the regional shopping centre at Lougheed Mall.

Inside the homes, the developer has focused on an open-concept design with a choice of two colour schemes: white raised-panel painted Shaker cabinets or woodgrain laminate flat-panel cabinets. All homes have nine-foot ceilings on the main level with seven-foot doors throughout.

There is wide plank laminate wood flooring throughout the main living areas including the kitchen and powder room, tile flooring in the bathrooms, and carpet on stairs, bedroom floors and upstairs hallways.

Quartz countertops are used in the kitchen with contemporary under-mount stainless steel sinks.  KitchenAid stainless steel appliances are standard with a 30-inch gas slide-in range, and a 20-cubic foot Energy Star rated French door fridge with interior water dispenser. Rounding out the package is a high-temperature, ultra-quiet dishwasher and a Panasonic under-the-counter microwave. All homes come equipped with stacking Energy Star-rated Whirlpool washer and dryer.

Ensuite and bathroom cabinetry and vanities are matched with the kitchen materials. The shower-tub surrounds are tiled in the main bathroom while the ensuites have shower units and heated floors.

The homes have spacious exterior decks or patios and feature a natural gas barbecue outlet.

Steve Nickens, a financial consultant who is shepherding four daughters through universities, is one buyer who is happy with Cedar Ridge, especially with the pricing as he and his spouse look to downsize from a single-family eight-bedroom home in the Burnaby Edmonds area.

“The prices in Burnaby and Vancouver are just ridiculous for townhouses,” said Nickens. “And I didn’t want to go out to Surrey or Langley. This is a good area because I don’t have to go over a bridge.” 

© 2018 Postmedia Network Inc.

Development gets green light despite complaints from street’s residents about traffic and parking

Grant Granger
Vancouver Courier

A stacked townhouse project in Burquitlam got the green light despite opposition from several area residents at a public hearing Monday.

Council approved second and third reading of the rezoning request by Adera Development to build three three-storey buildings containing 60 units on four lots in the 400 block of Lea Avenue because the proposal matched the type of housing council approved for the street in the Burquitlam neighbourhood plan adopted a couple of years ago.

The project, called Duet Two, will have ground-floor units ranging from 450 sq. ft. studios to two-bedrooms. Stacked on top of them will be townhouses on the second and third floors.

Adera vice-president of development Rocky Sethi told council it’s a concept it has done elsewhere in the Lower Mainland. He said it offers an alternative for families to living in cramped condos or buying more expensive detached homes or large townhouses. Although the concept is common in Burnaby, New Westminster and Vancouver, there are very few in Coquitlam.

Since the location is within walking distance — about 600 metres — of a SkyTrain station, the neighbourhood plan calls for medium and low-rise density.

Five people came forward at the public hearing to support the proposal because they said it was the type of housing they were looking for. 

But after they had their say, several Lea Avenue residents attacked the project because it will create more traffic than a side street can handle and exacerbate parking problems on a street that’s already difficult to navigate. They also said cramming 60 units onto four lots goes against the character of the neighbourhood suggesting row houses and duplexes would be more appropriate.

Coun. Chris Wilson said the city went through an extended process that involved community consultation before adopting the neighbourhood plan and the concerns being expressed Monday were not raised back then.

“We spent two years so it would eventually fit in with the neighbourhood,” Wilson told the residents. “We created a plan, we asked the neighbourhood to get engaged, and the developer has followed that plan.”

Mayor Richard Stewart said during the consultation 33 speakers came forward to address the neighbourhood plan and 31 said the zoning wasn’t high enough.

“Nobody showed up to tell us they wanted their neighbourhood to be single-family density,” said Stewart.

He also didn’t know why the residents of the complex would park on the street when there are 80 spots plus visitor parking being made available underground for the residents.

Darryl Stickler, an unsuccessful council candidate in the Oct. 20 civic election, said he was alarmed the developer went against the city’s advice and did not include any three-bedroom units, while also proposing eight studio units.

“I’m not opposing density, I’m saying 450 sq. ft. is too small, and where are the three-bedroom units?” said Stickler. “Where is that range of housing options?”

Sehti pointed out the company’s nearby Duet One project on Como Lake Avenue had more than 10% three-bedroom units, but Duet Two provides “a different housing typology.”

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Fortress Real Developments syndicated mortgages

Neil Sharma
Canadian Real Estate Wealth

Investors have started speaking out against Fortress Real Developments’ syndicated mortgages, primarily complaining that the risks associated with the investments were never verbally communicated.

A couple of investors who requested anonymity detailed financial losses in what they were led to believe were bulletproof investments. The first investor is based in Halifax and worries about the fate of his wife and three children after having lost $175,000, their retirement savings.

“This week, my wife was having chest pains worrying about this,” said the 50-year-old investor. “She’s a year older than me and thought she was having a heart attack. It’s not pretty. If we knew our money was safe and growing, we wouldn’t have these anxieties.”

In 2014, the investor removed his money from Apple stocks and put it into a Fortress Real mortgage for a development in Regina called Capital Point. He initially received quarterly dividends amounting to $2,504, the last of which came in Nov. 2016, but says a $12 monthly fee is still drawn from his bank account.

“The early days were fine,” said the investor. “They were paying us interest and the money was growing for probably the first two years, and then I started seeing news releases about Fortress. I’d reach out to (the agent) and he said there’s nothing to worry about, everyone is getting their money back. The last email I got from him was in June.

“Around 2016, I started reading the news articles and asking questions about getting my money back. It was a locked investment, not liquid; it was supposed to mature in 2017, and nothing. Now it’s 2018, and nothing. They’re not even paying quarterly dividends, yet they’re still taking money out of my account.”

The investor, who works in the mortgage industry, says he previously worked with Fortress Real Developments to secure funding for a client’s project, which was eventually scrapped, and says the company appeared professional and legitimate.

The other investor is an Ontario Provincial Police officer and also claims he wasn’t verbally apprised of the risks associated with syndicated mortgages, although he concedes it was likely in the paperwork. Moreover, as can happen with syndicated mortgages, he was bumped down the creditor ladder but wasn’t directly informed. He invested $30,000 he believes he’ll never see again.

“I was told it was low risk and that my name would be on title should anything go wrong with the development,” he said. “Mine and other investors’ names would be on the mortgage. I was told I would be in the number two position behind the bigger lenders, the bigger banks, which I was told was still a relatively safe position to be in. I dropped to fourth position without my knowledge. I had to find out through a special interview after tagging along with a friend who had also invested.”

He also says that he’s a low-risk investor.

“I would have invested in something safe and secure. I’m not a high-risk investor,” said the officer. “When things went south, I reached out to (Hong) and was told not to worry about it. She was the intermediary and I had to go through her to get to Fortress and she provided me some answers, and so did somebody at Fortress. I was given multiple explanations as to why things were happening, which to me don’t make sense, but that’s the way I was told.”

While the investors both claim the risks of investing in the Fortress Real’s syndicated mortgages weren’t communicated orally, the company’s legal counsel, Scott Fenton put out a statement claiming the contrary.

The statement claims investors were apprised of all “material risks involved in the projects.” Moreover, according to Fenton’s statement, “all investors were fully advised in writing of the assumptions and methodologies used by respected industry valuators in the development-based ‘opinions of value’ for the projects as opposed to bare ‘as is’ appraisals as incorrectly alleged by the RCMP.”

Copyright © 2018 Key Media Pty Ltd

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A key measure of changes in Canadian home prices has posted a decline for November

Steve Randall
Canadian Real Estate Wealth

The Teranet-National Bank National Home Price Index rarely posts a decline in November – it’s done so just 4 times in the 20 years – but it recorded a 0.3% decline from the previous month.

Most markets declined with Quebec City, Halifax, and Victoria the exceptions.

It was the second consecutive monthly decline with tighter mortgage lending rules and a rise in interest rates among the factors that have cooled demand significantly in some markets.

In Vancouver, November was a fourth month in a row without a rise in home prices, for a cumulative drop of 1.8%; and in Toronto, prices declined over the last three months, for a total loss of 0.4%.

There are also weak markets in Alberta, where prices did not rise for a fifth month in a row in Calgary, and for a third consecutive month in Edmonton, for cumulative declines of 1.4% and 1.3% respectively.

The index for Victoria was flat while Halifax (0.1%) and Quebec City (1.2%) both gained.

The HPI tracks price changes based a percentage rise or fall from a value of 100 set in June 2005.

Annual increases
While down month-over-month, the national HPI was up 3.1% year-over-year; exacerbated by a sharp drop in the previous three months.

Victoria (5.3%), Ottawa-Gatineau (5.3%), Montreal (4.4%), Hamilton (4.4%), Vancouver (3.9%) and Toronto (3.3%) all posted above-national-average increases and there were smaller gains for Winnipeg (2.3%) and Halifax (1.7%).

Indexes were down year-over-year in Quebec City (−0.3%), Edmonton (−0.4%) and Calgary (−2.7%).

Copyright © 2018 Key Media Pty Ltd

National sale prices are forecasted to rise modestly next year

Neil Sharma
Mortgage Broker News

The REMAX 2019 Housing Market Outlook concluded that the aggregate national price will increase 1.7%, an indication that Canada’s real estate market is achieving equilibrium. However, not every market is in for pastures green.

Vancouver’s sale prices are expected to drop by about 3%, according to the REMAX report, because housing affordability is beyond the means of a growing number of people.

“The drop in sales in key markets across British Columbia can be partially attributed to Canadians’ increasing difficulty in getting an affordable mortgage in the region,” said Elton Ash, REMAX of Western Canada’s regional executive vice president. “The situation created by the introduction of the mortgage stress test this year, as well as continually increasing interest rates, means more Canadians will be priced out of the market.”

REMAX predicts Toronto, on the other hand, is due for a 2% boost in the average sale price, and that demand for houses priced below $1 million will be high, while anything $1.5m and above will languish on the market longer. One reason for that is reticence about impending interest rate hikes through 2019.

“People are a little more cautious than they were in the past because interest rates are starting to rise,” said Christopher Alexander, REMAX’s vice president and regional director for Ontario-Atlantic Region. “Government said it would be more aggressive with interest rates and people are waiting to see how it will all shake out.”

Royal LePage also released a 2019 forecast, albeit one with a more conservative outlook. The report expects the national median price of a home to increase by only 1.2%, and similarly expects a tapered boost in the Greater Toronto Area of only 1.3%. While it does not expect Vancouver’s sale prices to be in the negative, it only sees a marginal boost of 0.6%.

According to the Royal LePage report, Montreal will continue enjoying good fortune with sale prices predicted to rise 3%.

“With healthy price increases projected in 2019, we’re forecasting the housing market in the Greater Montreal Area to outperform other Canadian urban centres,” Dominic St-Pierre, vice president and general manager of Royal LePage for the Quebec region, is quoted in the report. “Montreal is a great place to live and work. Would-be buyers are seeing home prices increase and they want to purchase while homes remain affordable.”

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