Technology and innovative ways changing the real estate industry

Mario Toneguzzi
REM

The real estate industry is facing plenty of disruption these days because of technology and innovative ways of doing business. The initiative getting the most buzz is the iBuyer, which has been well-established in the United States by firms such as Zillow and Opendoor.

“Currently these companies are crushing it,” says Ed DePrato of Sweetly in Edmonton, who is launching his own iBuyer brokerage. “They’re dominating the market. They’re already controlling more than 10 per cent of the available inventory in the cities where they operate.”

He says, “What iBuyer does is save the consumer all of the costs and headaches and hassles normally associated with being for sale. When you’re selling your home, the goal is to be sold. Being for sale is no fun.

“With an iBuyer there’s no interruption in your life. You simply go onto a website, answer a series of questions . . . It takes about 20 minutes and you can add a bunch of pictures if you want, pictures that help us understand the condition of your home. You can even submit information on what makes your home unique, what makes it more valuable or more desirable. Once we get that information we consider that information and weigh it against anything else for sale or sold recently in your neighbourhood and we come up with a value and make you an offer online – all without ever seeing your property.”

If a seller decides to accept the offer, they can set the closing date. The buyer isn’t moving into the home because it is simply buying it to re-sell the property. DePrato says his company’s fee will be eight per cent of the value of the property.

DePrato says this online way of doing real estate is the wave of the future because people are so used to doing everything online these days, from buying clothes and food to booking travel.

“Heck, we even find love online,” he says. “It’s a way for people to trade in their home just like they would trade in a car.”

Properly, a Toronto-based real estate technology startup, launched an iBuyer program in Calgary last year, and recently announced that it has secured funding to expand to Edmonton and other Canadian cities. The company says in a news release that it is “buying or selling a home nearly every day and growing rapidly.”

“There’s been a lack of innovation around real estate in Canada, but that’s changing with Properly,” says Gavin Myers, general partner of Prudence Holdings. “Investing in Properly was a clear choice because they’re providing the services homeowners want – convenience and transparency – while eliminating the pain points of selling a home.”

Properly offers a price match guarantee, which means if the home sells for more than Properly’s offer, “the majority of the upside is refunded to the customer,” the company says. “Properly’s service provides certainty, convenience and transparency, eliminating common issues associated with a home sale – inconvenient home showings, costly repairs, uncertain timelines and the risk of the offer falling through,” the company says.

Ross Kay of Ross Kay Realty Consultants in Burlington, Ont. says the iBuyer concept is simply a guaranteed sales initiative like many other ones in the market today.

“It’s just a scam. They’re trying to make the legacy brokerage model look as if it’s not legacy any longer when all they’re doing is rehashing old technologies, old approaches that have been around for four decades,” says Kay.

“Any guaranteed sales program, which is just what an iBuyer is, is structured so that the brokerage really cannot lose money. You’re not really giving them a market value price. Traditionally market value means the Realtor will try to sell your house for more money than what the neighbour sold for. Historically, that’s what market value has meant in organized real estate. Each new property you try to get a higher price. In the iBuyer program, it’s based on the old prices,” says Kay.

Cliff Stevenson, co-owner of Re/Max First Calgary and currently vice president of CREA, says the No. 1 reason for the proliferation of iBuyers on the market is convenience.

“There’s an argument to be made that the selling process can be challenging from a logistical perspective and preparing your home, doing repairs, maintenance, setting it up with your Realtor for showings, accommodating showings… The house could be on the market for quite awhile. There’s a convenience element for it for sure,” says Stevenson.

“There’s also a timing element for some people. Some of these iBuyer programs are able to complete the transaction relatively quickly for sellers – if somebody needs to get out or needs to know their number today and get out right away and move on somewhere else. The iBuyer option may work for them because they’re now having a very quick process as opposed to something that could take some time.”

But the main disadvantage, says Stevenson, is that a seller is not taking advantage of the pool of buyers on the open market.

“You don’t have exposure to the broad market to understand what your potential market value truly is,” he says. “But the other thing is that consumers have proven over the years that the advice they receive from a real estate professional is a huge part of the transaction. They want advice. They’re looking for ways to strategize the selling process. There’s an absence of that in many of these iBuyer models and you don’t have a trusted advisor like a Realtor to navigate through the process. You’re sort of on your own.”

CREA president Jason Stephen of Royal LePage Atlantic in Saint John, N.B., says the attraction of iBuyer programs is that it can be seen as an easier process for home sellers.

“The downside is at the end of the day, does somebody really know they’re getting full value for their house?” says Stephen.

“It’s like any real estate transaction. There’s risk and reward…My only concern is that homeowners should really understand what the true market value is on their house because they could be leaving a lot of money on the table. That’s why we point people to seeking advice from a professional Realtor. One of the jobs of a professional Realtor is to make sure that the transaction is easy and smooth but it’s very complex.”

In Atlanta, Ga., a traditional real estate brokerage is competing with the iBuyers with what it calls an instant offer comparison tool. The brokerage gathers instant move offers from companies such as Opendoor, Zillow and Offerpad, and then compares them to the estimated cost of a traditional sale using their company.

“We treat instant offer companies just like any other buyers and, in limited cases, an instant offer may be the best option for the seller,” says Craig McClelland, vice president of Better Homes and Gardens Real Estate Metro Brokers. “But in other cases, the convenience fees aren’t worth the lost equity. We pull together the information on the homeowner’s behalf, so they see the entire picture. That way, they can make an informed decision on how to sell what’s generally their most expensive asset.”

© 2019 REM Real Estate Magazine

The Lower Mainland beginning to recover

Neil Sharma
Canadian Real Estate Wealth

In the throes of a housing correction, British Columbia’s Lower Mainland might be witnessing the beginnings of recovery.

According to an economic outlook report from Central 1 Credit Union, the signs of recovery are there, however, its deputy chief economist still calls for tapered expectations.

“We’ve started to see a bottoming in the Lower Mainland area; sales hit a bottom in the spring and summer months, but now we’re seeing a moderate bounce back,” said Bryan Yu. “The latest numbers from CREA [Canadian Real Estate Association] suggest there was a nice increase in July, but levels are still around 2014 levels. To keep it in context, sales are on the upswing and the labour market is helping with that.”

Although there’s too little data to definitively state that the Metro Vancouver market correction is receding, Yu believes buyers have nevertheless adjusted to B-20’s rigidity.

“The change in mortgage rates and what people are receiving in the market now are a big lift for affordability, provided they meet B-20’s restraints,” he said. “A 2.8% on a five-year fixed mortgage is a 50 basis point drop from late 2018, so the numbers favour buyers. When we combine those factors we’re seeing relative affordability.”

The report also mentioned “recession-like conditions” in the region’s resale market going back to B-20’s implementation in January 2018. Yu added that sales are trending at 2012 levels and prices have dipped 10% below their peak.

However, construction starts will stay high through the end of the year because of the buying frenzy of the last three or so years.

“Year-to-date growth is over 15% for B.C., a surprisingly strong housing start performance for the first half of the year for the province,” said Yu. “We have to be careful, though, because there’s a lot of volatility when it comes to multifamily starts with big swings that come quickly. Our view is that given the resale and presale slowdowns, we see a drop off in momentum in the back half of 2020.”

Copyright © 2019 Key Media Pty Ltd

Toronto’s mixed-use developments booming

Neil Sharma
Mortgage Broker News

Toronto is experiencing one of the world’ s largest building booms, but it’s the city’s mixed-use developments that have become the world’s envy.

One such development is Union Park, a sprawling 4.3 million square foot, $3.5 billion office, residential and retail complex in the city’s core. Not only will it be one of the largest developments in Toronto’s history, it’s part of a growing intensification trend that maximizes every last available square foot. Toronto has over 50 occupied mixed-use developments with more on the way.

Matti Siemiatycki, associate professor at the University of Toronto’s Department of Geography and Planning, told Canada.com that developers had a light bulb moment in which they realized they could satisfy several crucial aspects of building.

“A cohort of developers has realized that projects are more profitable, that resident lifestyle is improved, and that communities are more vibrant when they embrace a broad, diverse and creative mix of land uses,” he said.

Mixed-use developments can often take on the larger form of a master-planned community—a type of development that’s proliferated the GTA housing market for much of the past decade. Joseph Felman, Camrost’s director of development, says the key to a good master-planned community is integrating into a new community and then ameliorating it.

That often comes through Section 37, a municipal planning stipulation that requires developers to make a community donation, usually in the form of a park or community centre.

Master-planned communities often emphasize healthier living, which, in tandem with intensification principles, often means pedestrian-friendly amenities.

“We’ve buried our parking below grade so we’re not a four-storey parking deck with condos above it,” Felman told Canada.com. “This has really opened up the pedestrian realm to ensure we have a walkable site rather than a walled city block. Our central piazza gives us seven frontages, and we intend to turn them all into vibrant retail zones with the same kind of stylish dining as in downtown Toronto.”

Copyright © 2019 Key Media

Vancouver had 25,000 vacant homes in 2016

Steve Randall
Mortgage Broker News

The share of Canadian homes that are unoccupied has been steadily rising according to a new report.

Point2Homes says that in 2016, 8.7% of Canadian homes were vacant, up from 8.4% in 2006 and 7.8% in 2001.

The analysis of government data on vacant residences shows that 1.34 million homes had no one living in them in 2016, with Toronto and Vancouver leading the high vacancy rates.

In volume terms, Toronto had 66,000 empty homes while Vancouver had 25,000, but Vancouver’s share of homes that were empty was the highest among Canada’s largest cities at 8.2%.

There were also more than 20,000 empty homes in Montreal, Calgary, Ottawa, and Edmonton.

By contrast, the study highlights that in the US, the vacancy rate has never exceeded 2.8% according to the Fed.

Largest increases

Over the 10 years from 2006 to 2016, Winnipeg saw the largest jump in empty homes in Canada, rising 42.7%, followed by 36.3% for Montreal and 32.5% for Edmonton.

While Vancouver saw a 9.6% increase in empty homes, Toronto posted a 4.7% decrease.

Copyright © 2019 Key Media

Canadian home sales up in July

Steve Randall
Mortgage Broker News

There was a 3.5% rise in Canadian home sales in July compared to June and unadjusted activity was up 12.6% year-over-year.

But despite gains – which took sales to around 15% above the 6-year low recorded back in February, sales are still lagging the highs of 2016 and 2017 by around 10%.

The Canadian Real Estate Association says that prices increased too with its National Home Price Index gaining 0.6% month-over-month and 0.2% year-over-year.

The average national sales price (unadjusted) was up 3.9% year-over-year to just under $499,000. However, this is heavily influenced by prices in the Greater Toronto Area and Greater Vancouver Area and without these two markets the average is more than $105K lower at less than $393,000.

“Sales are starting to rebound in places where they dropped when the mortgage stress test took effect at the beginning of 2018, but activity there remains well below levels recorded prior to its introduction,” said Gregory Klump, CREA’s Chief Economist “By the same token, sales continue to rise in housing markets where the mortgage stress test had little impact due to upbeat local economic conditions and a supply of affordably priced homes. Meanwhile, the mortgage stress test is doing no favours for homebuyers and sellers alike in places facing challenging local economic prospects and subdued consumer sentiment.”

Activity led by GVA, GTA

Activity advanced in about 60% of all local markets but while the monthly increase was led by Greater Vancouver and Greater Toronto, sales there remain well below levels recorded prior to the mortgage stress test that came into effect in 2018.

Sales were up from year-ago levels in most of Canada’s largest markets, including the Lower Mainland of British Columbia, Calgary, Edmonton, the GTA and Hamilton-Burlington, Ottawa and Montreal.

Balanced markets

New listings declined 0.4% in July with increases in Calgary, the GTA and Edmonton offsetting a decline in the Lower Mainland of British Columbia and Montreal.

With higher sales and lower listings, around three-quarters of markets were balanced in July 2019. There were 4.7 months of supply.

The national sales-to-new listings ratio tightening to 59.8% in July from 57.6% recorded in June. This marks its tightest reading and the biggest deviation above its long-term average (of 53.6%) in the past year.

Copyright © 2019 Key Media

BC residential sales up in July

Steve Randall
Canadian Real Estate Wealth

The British Columbia housing market showed improvement in July with residential sales up 12.4% year-over-year.

The latest assessment of the market from the British Columbia Real Estate Association reveals 7,930 home sales through the MLS system in July.

The average residential price in the province was $684,497, down 1.6% year-over-year but total sales dollar volume was $5.43 billion, a 10.5% increase from the same month last year.

“BC home sales climbed higher for the first time in 18 months on a year-over-year basis in July,” said BCREA Chief Economist Cameron Muir. Housing demand has also trended higher since March, rising 21 per cent on a seasonally adjusted basis. “Households appear to be adjusting to the tighter credit environment as the shock of the B20 stress test dissipates.”

Listings ease

While new listings in July fell 3% from the previous month on a seasonally adjusted basis, inventory was 12.4% above that of a year earlier with 41,621 units available for sale.

Sales-to-active listings ratio at 19.1%, similar to a year earlier.

Year-to-date, BC residential sales dollar volume was down 18.9% to $30 billion, compared with the same period in 2018. Residential unit sales decreased 14.4% to 43,612 units, while the average MLS® residential price was down 5.3% to $687,413.

Copyright © 2019 Key Media Pty Ltd

July sales were up for the fifth consecutive month

Penelope Graham
other

A jump in annual sales and a decline in new supply put the squeeze on national real estate in July, pushing conditions to the brink of a sellers’ market.

Transactions rose for the fifth month in a row with a 12.6% year-over-year increase, and up 3.5% from June. The number of newly-listed homes brought to market stayed flat, however, down -0.4%. That’s put upward pressure on the national average home price, which rose 3.9% to $499,000; excluding the Greater Toronto and Greater Vancouver markets would reduce it to $393,000.

Canadian Housing Market Continues Recovery

Overall, the Canadian Real Estate Association says the market has recovered by 15% from its February low, though lingers 10% below peak activity in 2016 and 2017.

Sales were up in 60% of all local markets, with the majority of volume in the GVA and GTA and additional increases elsewhere in the BC Mainland, Calgary, Edmonton, Hamilton-Burlington, Ottawa, and Montreal.

While this uptick is partly the result of buyers acclimatizing to the national mortgage stress test and a lower interest rate environment, even the largest markets remain subdued compared to pre-policy levels, say CREA’s analysts.

“The extent to which recent declines in mortgage interest rates have helped lift sales activity varies by community and price segment,” states CREA President Jason Stephen.

Gregory Klump, the association’s chief economist, adds that while borrowers seem to be adjusting to the stress test, which adds roughly 2% to their borrowing qualification thresholds, its mark on sales remains apparent, especially in higher-priced housing markets and those facing economic challenges.

“Sales are starting to rebound in places where they dropped when the mortgage stress test took effect at the beginning of 2018, but activity there remains well below levels recorded prior to its introduction. By the same token, sales continue to rise in housing markets where the mortgage stress test had little impact due to upbeat local economic conditions and a supply of affordably priced homes,” he stated.

“Meanwhile, the mortgage stress test is doing no favours for home buyers and sellers alike in places facing challenging local economic prospects and subdued consumer sentiment.”

National Buying Conditions Approach Sellers’ Market

Markets got more competitive from a national perspective, as flat new listings and the increase in sales tightened up the country’s sales-to-new-listings ratio to 59.8%, from 57.6% in June. This ratio, which is calculated by dividing the number of sales by the number of new listings over the course of the month, gauges the level of buyer competition within a local market. A ratio between 40 – 60% signals a balanced market, with below and above that threshold indicating buyers’ and sellers’ conditions, respectively.

According to this criteria, the national housing market is poised on the edge of a sellers’ market with the “tightest reading and the biggest deviation above its long-term average (of 53.6%) in the past year.”

At a local level, however, three quarters of all markets can be considered balanced. However, the number of months of inventory – the amount of time it would take to sell all available housing stock on the market – fell to 4.7 months, the lowest level since December 2017 and below the long-term average of 5.3 months.

While this indicates oversupply from slower market conditions is starting to alleviate, CREA points out that inventory levels vary widely across the country, sitting much higher than average in the Prairies and Newfoundland and Labrador, and well below average in Ontario and the Maritimes.

Price Growth Uneven East to West

The overall value of homes sold ticked up slightly, reflected in a 0.2% year-over-year increase in the MLS Home Price Index – the largest in two years. This is due to an uptick in two-storey single-family home prices, which rose 0.3%. One-storey single-family and condo prices stayed flat, while townhouse prices declined by -0.7%.

The widening gap between price trends continues across Canada, as western and prairie markets experience a downturn, while central and eastern provinces are seeing strong growth. 

BC: Prices continue to fall for Greater Vancouver real estate by -9.4%, and by -6.7% in the Fraser Valley. The decline was much less pronounced in the Okanagan Valley at -0.9%, while prices rose 1.2% in Victoria, and up 3.4% elsewhere on Vancouver Island.

Ontario: Prices are up in most of the Greater Golden Horseshoe, rising 6.9% in Guelph, 5.9% in Niagara Region, 5% in Hamilton-Burlington, and 5% in Oakville-Milton. Sold prices in Toronto rose 4.4%. The Barrie and District market was the only one to see a decline, down -1.3%. The strongest price growth in the province continues to be in Ottawa, up 8.9%.

Prairies: The Prairie markets continue to suffer from oversupply while home sales falter, putting downward pressure on prices. They’re down -3.5% for Calgary real estate, -3.2% in Edmonton, -4.4% in Regina, and -1.3% in Saskatoon. “The home pricing environment will likely remain weak in these cities until demand and supply return to better balance,” states CREA’s report.

Eastern Canada: Price growth continues to be strong in Greater Montreal, up 7.3%, while values rose 2.4% in Greater Moncton.

© 2015-2017 Zoocasa Realty Inc.,

Argyle Burke Mountain offers plenty of variety

Kathleen Freimond
The Province

Prospective homebuyers have plenty of options at Argyle, a new-home development in Coquitlam’s Burke Mountain neighbourhood.

Two construction companies – Benchmark Homes and Distrikt Homes – will build 64 single-family homes in Infinity Properties’ new subdivision. Benchmark will build on 57 lots, while Distrikt will be responsible for seven homes, explains Ashley Kapler, project sales director for Momentum Realty, the real estate brokerage managing the sales.

With the first phase of 31 lots on the market, buyers can select their home from a variety of plans ranging from 3,100 to more than 3,900 square feet, choose the front elevation from three façade options and pick their favourite interior design scheme from two colour palettes.

While the Benchmark homes all feature a roughed-in security system, a roughed built-in vacuum system and a switched soffit plug for Christmas lights, other upgrades include changing the layout in the basement to include a legal suite with separate entrance; a gas hook-up for a backyard barbecue; a surround sound speaker system; a Nest thermostat to manage energy consumption and an electric-vehicle charging station in the garage.

Benchmark’s show home is the Oxford floor plan with four bedrooms and three and a half bathrooms.

The show home’s great room is designed to appeal to young families with the open-concept kitchen, living room and dining room. With finishes from the white scheme, the kitchen’s Shaker cabinetry features charcoal-grey lower cabinets and white upper cabinets and the pantry cupboard alongside the refrigerator.

The major appliances are by KitchenAid: a five-burner gas range, a refrigerator with french doors and drawer freezer and dishwasher. The Panasonic microwave is in the island while the double sink’s location – below the kitchen window – comes with a view.

In the living room, the fireplace surround features the same marble-look tiles used in the kitchen backsplash while Benjamin Moore’s Revere Pewter wall colour – and the engineered hardwood that runs throughout the main floor – connects the family-friendly spaces.

In the master bedroom, the walk-in closet provides plenty of storage, while the ensuite bathroom has a luxurious ambience. The dark wood laminate double vanity has a recessed kick to contribute to the feeling of spaciousness and also benefits from two stylish sconce lights. The free-standing tub with a floor-mounted faucet and the frameless glass shower enclosure all contribute to the spa-like setting.

The Distrikt homes (the show home is nearing completion) will feature stone-clad exterior accents and black-framed windows on the facades that also includes a Craftsman-style front entry door.

The interiors are designed to provide neutral, timeless choices that will enable buyers to introduce their own design preferences into the space with their furniture and possessions.

In the kitchens, the Shaker cabinetry is complemented by the brick-look backsplash – in grey tones for the darker palette and light beige for the white scheme – that comprises porcelain tiles to reduce the grout lines.

Ensuites bathrooms have double vanities with quartz countertops, a MAAX free-standing soaker tub, and semi-frameless glass shower with tile surround.

Tynan Design developed the architectural design and floor plans for all the homes, explains Kapler, adding that while the construction companies are completing several houses to provide a move-in-ready option, other buyers can expect completion within nine to 12 months, depending on approval of permits.

Argyle Burke Mountain

What: 64 four-to-six-bedroom single-family homes

Where: 1441 Argyle Street, Coquitlam

Residence size and prices: : 3,100 – 3,900+ square feet; from $1,3 million (including GST)

Developer: Infinity Properties

Sales centre: 1441 Argyle Street, Coquitlam

Sales centre hours: noon – 5 p.m., Sat — Thurs

Phone: 604-998-2262

© 2019 Postmedia Network Inc.

Landlords claim citizens against virtually everything are making it hard to build or repair rental apartments

Frank O’Brien
Business in Vancouver

There is a new term bandied about now in Vancouver’s long-suffering rental housing market as developers and landlords attempt to meet tenant demand in a city with the highest rents and the lowest vacancy rates in the country.

The term is “CAVE people,” which is an acronym for “citizens against virtually everything” in relation to the difficulty in getting new market rentals built, bought or renovated in a city where the bulk of the purpose-built rental stock was completed when baby boomers were toddlers.

The CAVE, rental developers say, extends from the streets to city halls.

In June, Vancouver city council voted down the rezoning of a single-family lot in the exclusive Shaughnessy neighbourhood for a 21-unit rental project, citing local residents’ objections, though the project would have offered lower-than-market rents and had the support of the planning department.

A proposed 35-unit rental housing project in the Grandview-Woodlands area, where the first rezoning request was presented to the city in May 2018, is now into its fourth design change. The rental units have already been scaled back and city council recently referred the rezoning application to September 12 – 18 months after it first introduced.

Yet there is no guarantee the project, being stick-handled by Stuart Howard Architects Inc. for Brittania Ridge Developments, will ever be built. Locals opposed to the building said it fails to conform to the neighbourhood’s character during a series of public consultations.

If the project is ever approved, Britannia Ridge could be on the hook for thousands of dollars in compensation to tenants displaced by the new rentals.

Under Vancouver’s new Tenant Relocation and Protection Policy, passed unanimously in June, such residents who have lived in a unit for less than five years are eligible for four months’ rent in compensation, while residents who have been in a unit for more than 40 years are entitled to two full years’ rent.

The result of the delays and the increased tenant protection is that new rental construction in the City of Vancouver has fallen 29% in the past two years, noted Mark Goodman, co-author of the Goodman Report and a multi-family real estate specialist with Goodman Commercial Inc.

According to Goodman, a total of 7,587 rental units are under construction, approved or proposed for Vancouver, but he doubts all will be delivered.

In Vancouver, “the permit process takes longer than the actual construction,” Goodman said, noting that some developers have already withdrawn applications for new rental projects.

Policy and politics are also playing havoc with the purchase and renovation of existing Metro Vancouver rental apartment buildings, which have an average age of 61 years, according Goodman and LandlordBC president David Hutniak.

Sales of Metro Vancouver rental buildings plunged 50% in the first half of this year, compared with the same period a year earlier, while average prices decreased 26% in Vancouver and 20% in the suburbs, the Goodman Report stated. Total dollar volume for rental apartment building sales fell to $529 million, down 62% from $1.38 billion through the first six months of 2018.

Hutniak is not surprised that rental investors are pulling back, in spite of high rents and lower vacancies. He noted that the B.C. government has capped allowable annual rent increases to 2.5% this year, but in the City of Vancouver property taxes on rental apartment buildings have increased 25%, water system costs have risen 9.7% and BC Hydro passed a 2019 rate increase of 6.85% this spring.

Rental and development barriers have spread throughout Metro Vancouver, according to commercial agency CBRE. It notes in a recent report that Port Coquitlam is moving toward “eliminating and pre-emptively preventing” landlords from displacing tenants during renovations.

New Westminster is implementing a bylaw that would restrict city-owned land and even existing condominium buildings to rental-only zoning.

Burnaby City Council recently implemented Rental Use Zoning that requires that any new development include rental housing. The plan also requires developers to replace every rental apartment they demolish in a redevelopment on a one-to-one basis.

And those Burnaby replacement apartments would have to be rented out at affordable rates, defined as 20% below the rental market average. Displaced tenants would also be given the first opportunity to move into the new apartments once they’re complete.

“How can anyone continue to operate a purpose-built rental building in the face of all this?” Hutniak asked.

Copyright © Business in Vancouver.