Tall entryways, high ceilings and large windows make for a roomy feel at Keystone

Michael Bernard
The Province

One of the advantages of the housing development expansion into Langley and points east in the Fraser Valley is that buyers can have their pick of townhomes with a generous amount of elbow room, and at lower prices than similar-sized homes closer to Vancouver.

Keystone, a development located at Carvolth Village at 204^th Street and and 84^th Avenue in Langley Township, comprises three-level townhomes ranging up to 1,789 square feet, most with three bathrooms and a powder room. The sense of space is amplified the moment one walks into a display suite, with its the two-storey entrance and attractive chandelier lighting.

“It’s not that common to have a two-storey entryway when you walk in and have that nice open feeling in a location,” says Tyra Sauriol, sales manager for Axis Real Estate, which is marketing Keystone.

The abundant sense of space is also evident in the entertainment-sized decks, which overlook fenced backyards, and through the natural light that steams through the windows.

Creative DesignWorks has offered two colour schemes: Greystone and Sandstone. Flooring is wide -plank hardwood laminate throughout the living areas, while the bedrooms, hallways and stairways are fitted with plush carpeting.

The four-bedroom homes have one bedroom with an ensuite bathroom and shower on the entry level, which Sauriol says could serve as an in-law unit, a home office or quarters for a student or teenager.

The kitchens, which come with islands, have a contemporary Shaker- or flat-style cabinetry with undermount lighting, nickel hardware and soft-close drawers and doors. They come equipped with a full-height pantry with plenty of storage space. Stainless steel appliance packages by Whirlpool include a 36-inch counter-depth french door fridge and freezer, rated as Energy Star, a self-cleaning gas range with cooktop and large oven, and an efficient dishwasher.

Bathrooms have imported porcelain tile flooring, Shaker or flat cabinetry and a floating vanity mirror. The master ensuite features a separate shower with frameless glass and undermount sinks set in quartz countertops. Larger homes have a deep soaker tub as well as the shower unit. Second bathrooms have a soaker tub with porcelain surround.

An unusual feature of Keystone likely to appeal to downsizers is the roughed-in provision for a home elevator. Installer Mark Senner, owner of Stiltz Lifts of British Columbia, says installing an elevator in a new building is generally easier and less expensive than retrofitting one to an existing home. He said the cost ranges from $22,000 to $32,000, with some fancier models ranging up to $50,000. “It’s a way to change a townhome into a rancher,” he said, adding that the cost can usually be recovered on the sale of a townhouse.

Keystone, Carvolth Village

What: 85 three- and four-bedroom townhomes, 37 units in the first two of four phases

Where: 204^th Street and 84^th Avenue, Langley Township

Residence size and prices: Starting at $619,900 for four-bedroom townhomes ranging from 1,505 to 1,789 square feet

Developer: Archwood Developments Ltd.

Sales centre: #120 – 8912 202 St., Langley

Telephone: 778-705-0788

Centre hours: noon to 5 p.m., Sat — Thurs

© 2019 Postmedia Network Inc.

Proposed legislation could see commercial properties taxed on current rather than “highest and best” use

John Kurucz
Western Investor

The single largest impediment to the survival of B.C.’s small business, non-profit and arts sectors could soon receive a dramatic lifeline that’s been called on for years.

A private members’ bill introduced Wednesday by Liberal MLA Todd Stone seeks to create a new property tax class that would drastically reduce speculative land purchasing and skyrocketing tax bill increases.

The move would create a separate new tax class, which would separate tax levels based on a structure’s current use versus its potential future use.

The current model sees properties’ taxes based on a “highest and best use designation,” which allows property values and subsequent tax bills to soar by upwards of 200 per cent.

“The feedback that we’re receiving is that the impact of property tax escalation through triple net lease agreements is rapidly becoming the biggest pain, the biggest chunk of added cost,” Stone told the Vancouver Courier in an interview. “When you talk to business owners, they say to me ‘This is the final straw that broke the camel’s back.’”

To put the current tax reality into perspective, imagine a one-storey building located in a neighbourhood that allows zoning up to six storeys. Even though that plot of land has a one-storey building on it, it is taxed on the potential that it could one day be home to a six-storey structure and other development trends in the area.

Another example: a six-storey, mixed-use development. The first floor is a florist, while the remaining five storeys are slated to be residential. Those five storeys of future residential are taxed at commercial tax rates, which in Vancouver are roughly four times higher than residential.

That system allows for widespread property speculation, where developers can, in theory, raze entire blocks waiting for market conditions to change.

Stone said the potential change does little to the B.C. Assessment Authority other than the addition of a new property sub class, while local governments would ideally set mill rates at a rate far less than the commercial rate for a parcel of land.

If approved, the legislation would be entirely voluntarily — municipalities can opt in or out. The “highest and best use” notion would remain in place and local governments could then apply much lower tax rates on that vacant or underutilized air space on the property.

“There is maximum flexibility built into this,” Stone said.

Stone is hopeful the bill passes before the end of October so the changes can go in effect in time for 2020 tax rolls.

That’s asking a lot, as private members’ bills rarely receive traction. Getting buy-in from all parties in under a week is a huge ask.

Municipal Affairs and Housing Minister Selina Robinson told reporters October 23 that the governing NDP is working on both interim and long-term solutions, hinting that some relief will be forthcoming for the 2020 tax year. 

“I’m absolutely concerned about this,” Robinson said. “This has been a growing issue because of out-of-control real estate prices that the previous government ignored. It’s been building over time and they ignored it.”

Stone’s response to that claim: “Was it an issue three years ago? Yes. Was it an issue on the scale that it is today? No.”

The split assessment model has the backing of a huge swath of policy makers: chief financial officers from Vancouver, Burnaby, Coquitlam, North Vancouver, Richmond, Surrey and West Vancouver. It’s also received support from the Lower Mainland’s chambers of commerce and boards of trade and the B.C. Chamber of Commerce. Several resolutions on the issue have received support from the Union of B.C. Municipalities.

Aaron Aerts is the western economist with Canadian Federation of Independent Business (CFIB) and focuses his work on B.C. The CFIB conducted a study earlier this year that suggests 54 per cent of respondents are considering moving or closing their Metro Vancouver businesses due to property tax increases.

The same study five years yielded a response rate of about 25 per cent.

“I talked to one business owner in Gastown who said he’s been at his business for five years, putting in 80 hours a week and he’s finally starting to see some profit,” Aerts said. “He was hoping to scale back. He had to go back to day one because he had such a huge increase in property taxes that it had eaten away any sort of progress he had been making.”

Both Stone and Aerts said the problems plaguing Metro Vancouver aren’t ravaging other areas of B.C. yet, but the precursors are there.

“In five or 10 years this is going to be a huge story in Kelowna and Greater Victoria,” Aerts said.

Copyright © Western Investor

Grants to non-profit housing providers between 2019 and 2022

Steve Randall
Canadian Real Estate Wealth

A new program to help housing affordability for Vancouver renters has been approved by the city council.

It will award $25 million in grants to non-profit housing providers between 2019 and 2022, which will increase the affordability of social and co-op housing projects.

The Community Housing Incentive Program will be funded by revenue from the Empty Homes Tax and the City’s capital budget. It replaces the Housing Infrastructure Grant Program.

Between 2015 and 2018, the Housing Infrastructure Grant Program supported 10 projects, with $10.8 million in grants that enabled the delivery of 780 non-market homes.

In consultation with non-market housing providers, staff revised the existing program to target a higher funding contribution from the City, increasing the number of homes that rent at shelter rate and Housing Income Limits (HILs) through new projects and redevelopment.

The grants will be open for applications later this year, with more information coming soon regarding how the new process will work.

Copyright © 2019 Key Media Pty Ltd

Fraser Valley is Lower Mainland’s most active industrial market

Peter Mitham
Western Investor

The Fraser Valley has become the Lower Mainland of B.C.’s “most active industrial market,” with 105 sales worth $185 million in the first half of 2019, according to Avison Young.

This represents a quarter of the $740 million worth of industrial transactions Avison Young reported for B.C. in its report on investment sales in the first half of the year. Those transactions included 39 valued at $5 million and up, for a total of $391.6 million, as well as 243 transactions worth less than $5 million that added $348 million to the total.

With relatively few large industrial assets changing hands, thanks to a tight supply of available properties, the balance shifted in favour of smaller properties offering infill potential.

“Vacant industrial land that is development-ready is increasingly scarce with most land acquisitions being infill sites or requiring rezoning,” notes Colliers International in its own report on the region’s industrial market.

The available sites were often further out from the core, hence the rise of activity in the Fraser Valley.

Record-breaking deal

The strength of the market is shown in a recent transaction that Frontline Real Estate Services Ltd. handled at 33519-33527 Thompson Avenue in Mission.

Mission isn’t the most active industrial investment market in the Fraser Valley; that honour, according to Avison Young, goes to Surrey, which saw 62 transactions worth $92 million in the first half of 2019. By contrast, there were just four deals worth $5 million in Mission during the period.

But as activity shifts eastward, new records are being set.

According to broker Kyle Dodman, the deal on Thompson Avenue set a new record in per-acre pricing for Mission. The 0.82-acre site fetched $989,000, or $1.2 million an acre.

The site has industrial zoning and is conveniently located off the north foot of the bridge connecting Mission with Abbotsford via Highway 11. The Sumas border crossing is a 20-minute drive south.

Copyright © Western Investor

Canada Votes 2019 – now where do we go

Joannah Connolly
Western Investor

This week’s federal election results may not be a huge surprise, but it will certainly be a challenge for Prime Minister Justin Trudeau to manage a minority government.

It seems most likely that the federal Liberal Party will turn to the NDP for support, given that their values align most closely (it’s also what most Canadians want, according to exit polls). Most crucially, the Liberals’ 157 seats plus the NDP’s 24 seats totals 181 votes, which is above the 170 needed for a majority vote to pass legislation and means the Liberals don’t have to rely on working with any other party.

So, assuming that we see an NDP-supported Liberal minority government leading the country, what can we expect from the housing- and real-estate-related promises made during the two parties’ election campaigns?

With the Liberals in charge (mostly), one of the first orders of business is likely to be their promised increase in the qualifying purchase price for the recently launched First-Time Home Buyer Incentive (FTHBI) to nearly $800,000 in expensive areas such as Vancouver and Toronto.

In exchange for support on this, the NDP may hope to drive through their hoped-for policy to reintroduce 30-year amortization periods on insured mortgages for first-time buyers. But, as this was also a Conservative Party promise, and a move that the Liberal Party previously dismissed, the Liberals may well wish to push back on that. Considering that the increase in the FTHBI purchase price will be a major financial boost to many young Canadians, it may also be deemed unnecessary. The NDP may instead choose to push for their modest promise to double the Home Buyers’ Tax Credit to $1,500.

However, the two parties align, at least partially, in two key sections of the housing file. The first is the promise of more purpose-built affordable rental housing, which the NDP caucus will hope includes their pledge of an additional $5 billion fund to help build 500,000 affordable units over 10 years. (That said, Vancouver Courier columnist Michael Geller feels sure that $5 billion fund is not going to happen.)

The second crossover platform is a national foreign homeownership tax of some sort. From the Liberal side, the plan is to create a national, annual property tax on vacant residential properties owned by non-Canadians who don’t live in Canada — a bit like a national extension of B.C.’s speculation and vacancy tax. From the NDP side, it is for a national foreign buyer’s tax, applied one time only on the purchase of Canadian home by a non-resident foreign national.

You might think that the new minority government will pick one of the above and run with it. But B.C.’s major metropolitan areas have both, and the GTA already has a foreign buyer tax, so the minority government may well figure why not both across the entire country?

If that comes to pass, it could dampen overall foreign investment in Canadian real estate, by removing currently tax-free alternative investment destinations such as Montréal. Thus, it could ultimately suppress the recent, modest national real estate market recovery, or at least limit growth. Which may, of course, be an intended consequence.

In general, first-time home buyers should benefit, both from a housing market that has seen some price correction and from the increased FTHBI purchase price threshold in the priciest areas. That said, with the Conservative hope of easing the mortgage stress test for first-time buyers now out of the window, it may not be enough. And whether it will be enough to will stimulate activity and ultimately lead to a gentle market upswing (particularly in Metro Vancouver) remains to be seen.

What seems likely is that for the many who can’t possibly afford even close to $800K, home ownership will remain out of reach. Let’s hope a lot of those promised affordable housing units get built, and soon.

Copyright © Western Investor

Richmond farmland advocates want answers for skyrocketing farmland real estate prices

Graeme Wood
Western Investor

A burst of massive mansions recently built on farmland in Richmond should be a subject of investigation for the Cullen Commission of Inquiry into Money Laundering in British Columbia, says Laura Gillanders, an advocate for farmland preservation.

“We’ve always suspected money laundering has played a big role in the mansions on farmland, and the estates, and the illegal reported activity that goes on there. We know it’s certainly not local income or local farming income,” said Gillanders, a member of Richmond Farmwatch who plans to attend one of five upcoming province-wide public meetings to air her grievances.

The meetings will be held starting Wednesday, October 23 at the Fairmont Hotel Vancouver ballroom at 5.30pm. Anyone may pre-register to present their concerns and observations to the commission’s counsel. Over the next few weeks, meeings will also be held in Kelowna, Victoria, Richmond and Prince George. (Details at CullenCommission.ca/public-meetings-information).

“Our commission is a public inquiry called for the benefit of all British Columbians,” said co-senior commission lead counsel Patrick McGowan, who will lead the orderly conduct of the commission alongside lawyer Brock Martland, QC.

“The commissioner very much wants to hear from members of the community and have them share their views and thoughts on the problem that we’re facing and areas they would like to see the commission address,” said McGowan, whose primary responsibility is to represent the public interest.

Gillanders plans to present in Richmond at the November 7 meeting. She contends the public interest has been harmed by farmland speculation. But she concedes her grassroots group has had difficulty pinpointing the precise nature of skyrocketing land prices.

Richmond farmland prices soared between 2015 and 2018 as land purchasers utilized a gap in the City of Richmond’s bylaws, which until this year set no practical limit to house sizes.

For instance, a 26.6-acre lot at 11400 No. 2 Road owned by a shell company had a 2018 assessed value of $88,000, which soared to $8.3 million with a permit to build a large home.

House permits on protected farmland went from 10 in 2014 to as high as 43 in 2018. One proposed 41,000-square-foot home was denied by planning staff in July 2016 for being a de-facto hotel.

“We would really like to see this investigated further. To know our protected farmland is not a place for illegal activity or drug money and money laundering,” said Gillanders.

Mansions have been built and flipped, left unoccupied or, worse, been the scene of criminal activity, said Gillanders. Also, there are instances where landowners are granted building permits, house construction is started and then it’s abandoned.

“Sometimes these places take years to build. Whoever is building them runs out of money,” she said.

The commission has a mandate to look at acts or omissions of regulatory authorities or individuals with power in the real estate sector to determine whether those acts or omissions have amounted to corruption.

McGowan said commissioner Justice Austin Cullen has the power to compel municipal politicians and employees to testify.

“We have the power to compel witnesses and have them come and testify under oath. It’s my hope that most individuals or entities will be responsive to a simple request to come before the commission,” said McGowan.

To date, there are some examples of alleged money laundering in farmland real estate, coinciding with a flood of money from China into real estate. Experts such as Transparency International cite the phenomenon as the “Vancouver Model,” where proceeds of international crime (including the China-based fentanyl trade) wash through local real estate.

A civil forfeiture action filed June 29, 2017 in B.C. Supreme Court alleges a Richmond ALR property, at 8880 Sidaway Road, “is an instrument and proceeds of unlawful activity,” and “has been used to engage in crimes,” including “laundering the proceeds of unlawful activity.” 

It was in December 2015 that the B.C. Lottery Corp. was informed the mansion was operating as an illegal casino, the B.C. Civil Forfeiture Office claim alleges. A year later RCMP responded to the house to investigate a reported hostage incident at gunpoint.

Copyright © Western Investor

Big losers in Canadian election could be foreign real-estate speculators

Geoff Zochodne
The Vancouver Sun

The biggest losers of Monday’s federal election may not be a political party, but foreign homebuyers and homeowners, who are facing the possibility of new taxes levied on them by a Liberal minority government supported by the New Democrats.

Prime Minister Justin Trudeau and the Liberals vowed in their platform to “limit the housing speculation that can drive up home prices” with a national tax on vacant homes owned by non-Canadians who are not living in Canada. According to a backgrounder, the Liberals are aiming to charge an annual one-per-cent tax, modelling it on a similar measure already in place in British Columbia.

“In every decision we make as your government, we will always put this country and its people first,” Trudeau declared in his victory speech.

But the Liberals are heading back to Ottawa 13 members of parliament short of majority status in the 338-seat House of Commons. To pass legislation, a Liberal minority government will need to cobble together support from other parties.

A possible (and perhaps even likely) partner for the Liberals is the NDP, which secured 24 seats in the election and whose platform also promised to fight real-estate speculation. Instead of an annual tax on foreign homeowners, the New Democrats and leader Jagmeet Singh pledged a 15-per-cent foreign buyer’s tax on the sale of homes to non-Canadians or people who are not permanent residents.

Singh in his concession speech said he had spoken to Trudeau and “let him know that we’ll be working hard on making sure we deliver the priorities that Canadians have.”

He later added, “We want to help Canadians be able to get a home that they can afford.”

Neither the Liberal nor NDP proposal may be enough to slam the brakes on a Canadian housing market that has continued to gain momentum. Home sales increased 15.5 per cent in September from a year earlier, the Canadian Real Estate Association reported earlier this month.

“The vacancy tax will create a nuisance for mobile homeowners and will generate a modest revenue source for the government, but it is unlikely to have broader economic impacts,” noted Rebekah Young, director of fiscal and provincial economics at the Bank of Nova Scotia. “Otherwise, the leading party has so far resisted broader measures pitched by other parties that would further fuel price escalation. An NDP alliance would put welcomed pressure on accelerating supply side solutions but its broad-based foreign buyer’s tax proposal warrants caution.”

The Liberals’ proposed vacancy tax received a cool reception from industry when it was announced in September. Now, however, the ambitions of the Liberals and NDP to do something about housing speculation, as well as their likely alliance, increases the probability of some kind of tax.

Time may still be limited to implement a new tax. Analysts from Citi noted Tuesday that recent Canadian minority governments have fallen within an average of two years, sending voters back to the polls well ahead of the usual four-year run of a majority government.

Trudeau also vowed to expand the first-time homebuyer incentive, a shared-equity mortgage with the government, to try to help would-be owners in hotter real estate markets such as the Greater Toronto and Vancouver areas.

A Bank of Canada survey of senior loan officers released Tuesday found lower interest rates had prompted greater demand for mortgages in the third quarter. That demand, the survey found, is expected to ratchet up further in the fourth quarter, in part because of the government’s first-time homebuyer incentive.

The Liberal platform’s proposals “are only likely to add further fuel” to housing prices at a time when the market has already been picking up steam, according to Toronto-Dominion Bank senior economist Brian DePratto.

“The federal government is by and large limited to demand-related measures,” he said in a note. “Some parts of the Liberal platform, such as a one-per-cent annual foreign buyer vacancy/speculation tax (echoing B.C.’s measures on this front), may help to moderate demand, but others appear set to stoke it.”

© 2019 Financial Post

A report says that transactions in niche assets have exploded

Steve Randall
Canadian Real Estate Wealth

Investors in commercial real estate should consider more than the mainstream asset classes and go niche.

That’s the takeaway from a new report from global real estate firm Cushman & Wakefield that highlights the benefits of investing in niche assets.

These assets include cold storage, data centres, medical offices, student housing, and senior housing.

The report says that transactions in niche assets have exploded in recent years and are now similar to retail and industrial. And changes in how we live and the aging population is set to drive volumes higher.

Niche assets have also outperformed the overall CRE benchmark in the two most recent recessions, suggesting that this could provide defensive exposure in future downturns.

Investors also gain exposure to secular drivers such as changes in demographics, affordable housing challenges, technology, and consumer behaviour.

Complex operations The report notes that institutional activity in niche assets could have room to expand from its current uneven pattern, which would “support pricing and liquidity in a virtuous cycle.”

However, it’s suggested that investors might be better buying an experienced operator in a niche or partnering with one, as niche asset strategies are “often operationally complex.”

Copyright © 2019 Key Media Pty Ltd

Newly constructed developments are driving strength in Victoria?s condo sector

Ephraim Vecina
Canadian Real Estate Wealth

Condos have been enjoying a gradual increase in popularity in Victoria, which helped keep the market’s average housing price at a moderate level during the third quarter, according to Royal LePage.

“Newly constructed developments are driving strength in Victoria’s condo sector. Units in these new builds are being sold quickly,” Royal LePage Coast Capital Realty sales representative Neil Bosdet said.

The latest Royal LePage House Price Survey showed that Victoria’s average home sales price moderated by 0.4% year-over-year, ending up at $760,475 as of Q3 2019.

By asset class, the median price of condo units grew by 6% annually during the quarter, to an aggregate average of $493,448.

“We are seeing millennial and first-time home buyers attracted to condos for their relative affordability. Younger generations are also willing to sacrifice space for a more desirable downtown location.”

Meanwhile, two-storey dwellings saw their average price fall by 1.5% to $858,658. Bungalows suffered a 0.8% year-over-year decline to $765,091.

To compare, the national aggregate housing price increased by 1.4% annually to $630,335 during the third quarter.

Royal LePage predicted that for the final quarter of the year, this aggregate price will go up by 1.5% year-over-year to $632,226. This will also be 0.3% higher compared to the third quarter of 2019.

Copyright © 2019 Key Media Pty Ltd