It will be shopify’s first permanent office in the city

Steve Randall
Mortgage Broker News

Shopify has made a major commitment to Vancouver with a new permanent office due to open later this year.

The decision to open a 70,000 square foot office across four floors at Bentall Centre city follows last year’s decisions by Apple and Amazon to occupy space in Vancouver.

The firm says that it will hire 1,000 employees and that it sees great value in the city thanks to its rich pool of talent and potential for future growth.

“We see a lot of growth happening in Vancouver, but we believe we can offer something different. We’ll be solving real and complex problems that matter to the entrepreneurs we support. The team will be shaping products from scratch to help over one million businesses around the world, and their hundreds of millions of customers,” said Lynsey Thornton, Vice President of UX at Shopify, who will be leading the office in Vancouver. “I was Shopify’s first employee in Vancouver, and it’s always been clear to me that there’s a huge local talent presence here.”

The new office is located at Bentall Centre, Tower 4 (1055 Dunsmuir St) and the space will be custom-designed to create an inspiring workplace. It is due to open late 2020.

Attracting world leaders
Responding to the news, Michelle Mungall, BC’s Minister of Jobs, Economic Development and Competitiveness said that it is further proof that B.C. is a preferred place to do business among the world’s leading companies.

“This proud Canadian company recognizes B.C. for our top talent and potential for continued growth. Vancouver is known around the world as a hub for innovation and a highly skilled workforce, which continues to make our province attractive to businesses of all sizes,” she said.

Copyright © 2020 Key Media

Chinese nationals are a considerable proportion of Vancouver real estate buyers

Sean MacKay
Livabl

The coronavirus outbreak that originated in the Chinese city of Wuhan has already had a significant effect on life beyond China’s borders, with cases springing up around the globe and an increasing number of travel advisories being issued.

As the death toll tragically rises, anxiety is running high over whether the virus will continue accelerating its spread across China and reach public health emergency status in other countries. These worries will have far-reaching economic impacts at the local level for 2020, including on the Vancouver housing market’s performance.

With Chinese nationals still making up a considerable proportion of Vancouver real estate buyers, there’s little doubt that the coronavirus will impact market activity in the first few months of 2020 and potentially beyond.

Vancouver realtor and blogger Steve Saretsky believes the new condo and luxury segments of the market will get hit hardest by a drop in sales.

“[T]he local impact on cities such as Vancouver could prove challenging, especially for some luxury condo projects hoping to cash in on a wave of buyers this time of year,” wrote Saretsky in a blog post published earlier this week.

“Vancouver developers have been ramping up advertising, promoting a bevy of incentives and discounts for Lunar New Year shoppers. Chinese New Year is typically viewed as an opportune time to clear existing inventories. However, new home sales could prove disappointing this year with many Chinese buyers grounded,” he continued.

Saretsky is referring to the fact that Chinese tourism has seen a drastic dip since December as fears over the coronavirus took hold and the country’s government began quarantining millions of people in major cities stricken by the illness.

“Chinese tourists, the biggest source of outbound travellers worldwide, spent $130 billion overseas in 2018. Chinese tourists are also the world’s biggest spenders on luxury goods, snapping up everything from fancy watches and handbags to Vancouver condos on overseas trips,” he wrote.

Beata Caranci, chief economist at TD Economics, wrote that, at the global level, there will be heightened market uncertainty and an increase in volatility as the virus spreads. While it will eventually level off, this sense of uncertainty will filter down into local markets in a variety of ways, including the hit Vancouver’s new condo and luxury markets will likely take in the first few months of the year.

“All told, we maintain confidence that the swift response of authorities globally will arrest the evolution of the outbreak with time,” she wrote in a note earlier in the week.

Using the impact of the 2003 SARS epidemic as her framework, Caranci said the coronavirus would cause a small disruption to Canada’s economic growth for the year, with most of the impact being felt in the first quarter.

“There’s little doubt that confirmed cases will continue to rise globally in the near-term, but Chinese authorities have demonstrated a swifter and more transparent response than the SARS episode, both domestically and in alerting the World Health Organization,” she wrote.

© 2019 BuzzBuzzHome Corp

Significant purchases by major developers suggest recent land sale slowdown may be ending

Peter Mitham
Western Investor

Year-end housing data from Canada Mortgage and Housing Corp. (CMHC) earlier this month pointed to record housing starts of 28,141 units for Metro Vancouver in 2019. This was up 20 per cent from a year earlier.

The activity was in sharp contrast to land sales in the region, which fell sharply.

Data from the Real Estate Board of Greater Vancouver indicated a 55 per cent drop in the number of land sales through the third quarter versus a year earlier. The value of those sales dropped 64 per cent to just $2.2 billion.

But there are signs of life in the market as 2020 gets underway.

Grosvenor Americas recently purchased a 4.8-acre parcel, currently home to a car dealership, for $167 million, completing the assembly of a 7.9-acre development site in the Brentwood area of Burnaby.

“This is a very sizable one, both in terms of price and in terms of size,” said Bob Levine, a principal in the Vancouver office of brokerage Avison Young.

More recently, brokers at Avison Young handled Bene Development Ltd.’s sale of a 3.4-acre mixed-use development site at 6851-6871 Elmbridge Way to Landa Global Properties Ltd. for $60 million.

“People very much believe in the long-term viability of the market,” Levine said. “The development community is certainly looking towards the future in terms of new potential developments in and around Greater Vancouver.”

Shift to rental

Situated opposite Brentwood SkyTrain station on Lougheed Highway between Alpha and Beta streets, the land assembly Grosvenor Americas recently completed is slated for a mixed-use development described in marketing materials as “a carefully curated mix of market condominiums, market rental homes, non-market rental homes and a variety of retail and office space.” The commercial space will total about 500,000 feet and could include a hotel.

But according to Mike Ward, senior vice-president and general manager for Grosvenor Americas, rental units will account for 60 per cent of the residential space, or more than 1,200 units. This exceeds the city’s requirement of 20 per cent and reflects a marked shift in the region towards rental units.

According to figures from CMHC, 24 per cent of all housing starts in the region last year were rental. The previous year, the proportion was an all-time high of 27 per cent. Since 2013, market and non-market rentals have consistently been 17 per cent of starts or greater. The average for the period has been 21 per cent.

“There’s going to be a need for a lot more residential accommodation, whether it’s rental or condo,” said Avison Young’s Levine.

But the chance of significant additions to the rental stock in Vancouver itself is slim because of the cost of land. Instead, developers are having to look outside the city, where lower costs and policies designed to encourage density on redevelopment sites are helping make the numbers work.

“The increased density that’s allowed reduces land costs per unit, and it allows you to give serious consideration to building rental,” Levine explained.

Municipal policy helping

Ward credited the new housing policy Burnaby adopted last May with giving legs to its plans.

“[It] encourages rental housing, and on this site in particular, we’ve got unique zoning,” he said, noting that it’s a commercial zoning that “also allows market rental-residential.”

In short, the zoning supports a mix of uses that allows Grosvenor to make economic sense of a project that will meet the city’s requirements as well as its own desire for an investment property generating long-term income.

“There seems to have been a shift in the market where cities are encouraging rental density by providing and allowing more density on sites … and making it feasible,” he said.

In addition to its Brentwood purchase, Grosvenor partnered with Citimark Group and Transca Real Estate Development (Canada) Ltd. to acquire 6699 Dunblane Avenue near Metrotown for a 36-storey residential tower.

Copyright © Western Investor

December 2019 was the seventh straight month of price growth in the red-hot market

Ephraim Vecina
Mortgage Broker News

Single detached housing is becoming an increasingly rare resource in high-demand Toronto, according to the market’s real estate association.

Data from the Toronto Real Estate Board indicated that in December, the market saw 1,984 sales of detached homes, representing a 24.77% annual increase. The City of Toronto accounted for 465 transactions, which was 36.76% higher compared to last year.

During the same month, the number of new detached properties was just 1,627 listings, significantly declining by 22.15% year-over-year. In the City of Toronto, 366 detached homes were newly listed in December, inching down by 2.91% annually.

This relative scarcity has spurred substantial acceleration in the growth of detached home prices. The benchmark price of the asset class was $961,100 in TREB’s overall jurisdiction (up 5.8% from 2018 levels), and $1,157,100 in the City of Toronto (up 5.44%).

“December’s 5.8% increase marks the seventh consecutive month of acceleration,” Better Dwelling said of the TREB numbers. “The rate of growth is now at the highest level since October 2017. Prices are still down more than 8% from the May 2017 peak.”

And this pace will most likely last well into 2020, a Point2 Homes predicted earlier this month.

Throughout last year, Toronto sales across all housing types amounted to a total of 87,825. This was notably 12.6% higher than the 10-year low (78,015 sales) observed in 2018.

“Much of last year’s gains happened in the second half of 2019, with boosted buyer confidence thanks to decreasing mortgage rates and a stronger local economy,” Point2 Homes explained.

“The low-rise housing market experienced one of the most significant recoveries last year, particularly in 905-area communities around Toronto that hadn’t recovered as quickly as the city did after the 2018/early 2019 market correction.”

Copyright © 2020 Key Media

A significant driver of reverse mortgages appears to be weaker-than-expected purchasing power

Ephraim Vecina
Mortgage Broker News

Despite a decelerating pace of borrowing, Canadian seniors still pushed the nation’s reverse mortgage debt balance towards yet another record-breaking high of $3.98 billion in November, according to figures from the Office of the Superintendent of Financial Institutions.

This represented an increase of 14.09% year-over-year, and 1.49% from October 2019. The trends point to overall very strong growth, outweighing the slowdown observed in the few months prior.

“The rate is half of where it was since last year. It’s also at the lowest 12-month rate reported since February 2016,” real estate information portal Better Dwelling noted in its analysis of the OSFI data. “For a little context, the balance of reverse mortgage debt is rising 3x the speed of traditional mortgages. It’s slower than last year’s breakneck speed, but still a high growth segment.”

A likely driver borrowing among the nation’s elderly is the fact that retirement itself has not proven to be smooth sailing, according to a new Sun Life Financial Inc. survey released in late November.

Nearly three out of four (72%) Canadian seniors polled by Sun Life admitted that their purchasing power did not end up as strong as they anticipated. Around 23% said that they had to significantly dial down their expenses upon reaching retirement age, “following a strict budget and refraining from spending money on non-essential items,” the Financial Post reported at the time.

Meanwhile, 65% of those still working after retirement said that it’s because they need the additional income, not because they like working for working’s sake. And fully 44% of working pre-retirement Canadians are anticipating that they’ll still be employed full-time by age 66.

Copyright © 2020 Key Media

Data usability challenges continue to hinder productivity

Kimberly Greene
Mortgage Broker News

PropTech adoption has hit a critical mass threshold, according to the 2020 Altus Group CRE Innovation Report. For the first time in the five years since Altus Group began conducting this annual research, a majority of commercial real estate (CRE) leaders fully recognize the disruptive impact of PropTech, acknowledging that many advanced technologies can potentially solve their current challenges.

PropTech has been called the digitalisation of real estate, and can be used to describe companies, an enhanced consumer experience, and technology for everything from software to manufacturing. The report finds that online marketplace platforms in particular are gaining significant traction, with 61% of CRE leaders saying they will have a major disruptive impact on the industry. Recent years have seen new platform-based marketplaces connecting a broad network of market participants (such as buyers and sellers, tenants and landlords, lenders and borrowers, and investors and fund managers), and delivering transactional efficiencies as well as the collection and aggregation of data for the benefit of users. Lending platforms have experienced the largest level of adoption to date, with 63% of CRE firms having used an online lending marketplace for a recent transaction and 79% planning to increase use in the future.

As PropTech is here to stay, companies have successfully transitioned the structure of their organization to accommodate growing amounts of data and determining how to use that data effectively.

“CRE continues to rapidly accelerate its digital transformation and despite the growing complexity stemming from the proliferation of data, the industry is clearly shifting from a stage of ‘trial and testing’ to one of practical innovation to solve their current challenges today,” said Altus Group CEO Bob Courteau.

The challenges that CRE executives face today surrounding data are different from five years ago, and they report that the areas that they’re more concerned with now than they were in 2015 include: issues around the regulatory requirements of collection and management of data; lack of internal expertise/capability; lack of normalized data formats; and the lack of company desire to invest in technology.  

To help deal with these challenges, eight out of 10 CRE firms now have a chief data officer or equivalent senior executive who oversees their organization’s data strategy and data governance, compared to only 44% four years ago.

PropTech has been disrupting the residential housing landscape for almost a decade, and Michael Cook, SVP of product marketing for Altus Group, says that the CRE space has actually been ahead of the residential space when it comes to investment in technology. The focus for investors and operators, however, has been different.

“In the residential space, the focus has typically been on the marketing process, end-user convenience, efficiency, and speed of transactions, while many of the CRE PropTech solutions are focused on functional applications, data management, and insights leading to increased performance from their assets, both financially and physically,” Cook said. “Because CRE has been mostly limited to institutional investors and trades much less frequently, the space has remained driven by a gobal network of experienced relationships across the industry. Many of the incumbent technology vendors were founded in the 1980s and early 1990s, before the arrival of the internet.”

Cook said that the recent boom in PropTech investment has been driven in part by the traditional tech ecosystem of VCs and founders discovering the CRE insutry and building startups geared specifically to accommodate the nuances of CRE.

Even as CRE executives have moved to accommodate changes that PropTech has required, views are still mixed about the impacts and opportunities that new technology affords.Three-quarters of CRE leaders said automation will eliminate jobs, but almost as many said that it will introduce new types of jobs within the industry and 67% said that positions will shift toward higher value-add tasks. While CRE leaders recognize both the impact on jobs and the short-term productivity benefits that automation can deliver, a major challenge is to anticipate how it shapes the future of the CRE workforce. 

Eighty-nine percent of CRE executives said that significant consolidation is needed for PropTech to more effectively deliver on the needs of the CRE industry. Almost half (43%) indicate the push is already underway or will occur within a year. The areas that CRE execs feel are most likely for consolidation include property management, property transactions and listing services, and financing and lending firms.

The annual Altus Group CRE Innovation Report provides an outlook on technology trends and highlights the current digital transformation impacting the global CRE industry. It is based on a global quantitative survey of 400 CRE C-level and senior executives in both front and back office positions at owner operator and investor firms in North America, Europe, Asia-Pacific and Latin America. Altus Group Limited is a leading provider of software, data solutions and independent advisory services to the global CRE industry.

Copyright © 2020 Key Media

Florida’s housing market is constrained by tight inventory

Steve Randall
REP

Florida’s housing market is constrained by tight inventory which is not likely to improve significantly due to several challenges cited in a new report from Florida Realtors.

Chief Economist Dr. Brad O’Connor sees robust growth for the market with strong immigration and low unemployment in the state. Home sales are expected to gain 4% year-over-year in 2020, similar to 2019.

Last year, Florida saw an uptick in sales despite a 9% pullback from international buyers.

“It was exciting to see the almost 6% growth (5.9%) in closed single-family sales in 2019 from 2018,” O’Connor said. “Florida topped over $100 billion (total of “$101.9 billion) in volume in home sales last year, up 8.3% from 2018; for condo-townhouses, we reached $31.6 billion in volume, up 1.8% over the 2018 figure.”

But with new listings down 11.4% year-over-year for single-family homes and down 9.7% for condos, prices are set to rise around 4%, although O’Connor doesn’t see that as a problem currently.

“The median sales price still continues to rise, but looking at what the monthly mortgage payment is, that’s still a lot lower due to current historically low mortgage rates,” O’Connor said. “And that continues to drive sales and makes it a good time to buy.”

Supply side issues
The challenges to increased supply in Florida were discussed at the 2020 Florida Real Estate Trends summit during last week’s Florida Realtors Mid-Winter Business Meetings.

One of the panelists was Kristine Smale, senior vice president, Meyers Research, who says that there are three main factors restricting supply: higher construction costs, which moderated slightly in 2019 but are expected to rise again in 2020; a shortage of labor – 2019 had the largest amount of construction job postings since the Great Recession; and a lack of available, affordable land supply.

Copyright © 2020 Key Media Pty Ltd

Farmers may be allowed additional options for residences

Steve Randall
REP

Farmers may be allowed additional options for residences on their land under new proposals being considered in British Columbia.

The provincial government is weighing the potential for people living in the Agricultural Land Reserve (ALR) to enable landowners to have both a principal residence and a small secondary residence on their property, provided they have approval from their local government. This would not require ALR approval.

“We are continuing to do the work necessary to help farmers farm and protect farmland for future generations,” said Lana Popham, Minister of Agriculture. “The ALR is B.C.’s best food-producing land and is just 5% of our province’s land base – it’s so important for food security. The proposed changes, if implemented, would provide additional residential flexibility in the ALR. Under the proposal, a small secondary residence would be available for farm-workers, family members or anyone else, provided there is local government approval.”

What’s being considered? The new ALR residential options and specific conditions with each option such as size, siting, and quantity being considered by government include:

• garden suites, guest houses or carriage suites;
• accommodation above an existing building;
• manufactured homes; and
• permitting a principal residence to be constructed in addition to a manufactured home that was formerly a principal residence.

The secondary residence would not have to be a manufactured home only for an immediate family member. This is currently the case.

“Publicly sharing this proposed policy direction now gives those interested an opportunity to review and comment, leading to better outcomes,” added Popham.

Copyright © 2020 Key Media Pty Ltd

A real estate marketplace for agents

Steve Randall
REP

A real estate marketplace for agents which has seen success in Ontario is planning nationwide expansion.

Wowa is an AI-powered solution that helps home buyers and sellers search for real estate agents with a combination of experience, services, personalities, and pricing that is best-suited to their individual needs.  

It launched almost a year ago with 10 agents and now has more than 250 registered agents and 20,000 monthly visitors to its platform, which can be accessed on any device.

Having established a presence in every major city in Ontario, the firm is now targeting British Columbia for its next growth phase.

“One of the major barriers in online hiring platforms is the lack of trust and personal chemistry,” says Wowa CEO Dr. Hanif Bayat, “With Wowa’s detailed profiles, crowdsourced reviews, and integrated media solutions, Wowa establishes trust and relationships between real people – our customers and our agents.”

As well as profiling agents, the platform also provides several tools for home buyers and sellers including a mortgage affordability calculator and first-time buyer calculator.

“We found that most home buyers were confused about how they were being assessed for mortgage affordability, especially after the introduction of the mortgage stress test.” added Bayat. “To help them understand conflicting estimates from different lenders, we developed an all-in-one calculator that combines various models with a comprehensive and intuitive visual interface and guide. The response we received from our visitors has been fantastic.”

Copyright © 2020 Key Media Pty Ltd