Archive for the ‘Real Estate Related’ Category

Canada’s reverse mortgage balance expands anew, exceeding $3.7B

Thursday, October 17th, 2019

Seniors using reverse mortgage borrowing intensifies

Ephraim Vecina
Mortgage Broker News

Canada’s reverse mortgage balance continues breaking its own records, reaching a new high in July as seniors’ borrowing kept intensifying.

The balance stood at $3.78 billion on that month, having increased by 26.24% annually and 0.98% from June, according to OSFI filings.

While growth in this debt type is decelerating slightly, “it’s still one of the fastest (if not the fastest) segments of credit growth,” according to an analysis by housing information portal Better Dwelling.

However, multiple observers have warned that this trend is unsustainable in the long term.

A significant proportion of Canadians are betting on their residential properties as evergreen investments, but several warning signs of housing’s likelihood of failure as a retirement plan have become apparent.

“More and more Canadians are retiring with a mortgage, which 30 years ago would have been unheard of. People are retiring with debt, with a mortgage, simply because they just didn’t plan well,” Carte Wealth Management’s Jacqueline Porter told the Toronto Star earlier this year.

“I have conversations with clients all the time. Freedom 55 is out the window.”

A crucial mistake that many employees and professionals commit is operating under the notion that economic and housing growth will be permanent, Porter added.

“You can’t look at the last 40 years and think that’s what’s going to happen the next 40 years, especially as people continue to use their home as a piggy bank.”

Copyright © 2019 Key Media

Hoping for a change to B-20 regulations? Not so fast

Thursday, October 17th, 2019

Voting with the hopes that those amendments will be drastically changed is wishful thinking

Kimberly Greene
Mortgage Broker News

Early voting has already begun across the country and no doubt voters are looking out for their best interests when making their choices.

Fresh in the minds of some would-be homeowners and mortgage professionals alike are the proposed amendments to B-20 regulations, particularly the stress testing component. One lending executive, however, says that voting with the hopes that those amendments will be drastically changed is wishful thinking.

Politicians are powerful, but there are limits to what they can and can’t do, says Nick Kyprianou, president and CEO of River Rock Mortgage Investment Corporation.

“Don’t forget, politicians don’t have the power to make changes with the financial institutions that people think,” Kyprianou said. “OSFI runs itself. They’re not a political entity. So the politicians can say ‘we want you do this, we want you to do that,’ but at the end of the day, [OSFI is] mandated to make sure financial institutions are strong.”

The Office of the Superintendent of Financial Institutions (OSFI) is part of the government, but it is an independent agency that is responsible for regulating federally registered banks and insurers, trust and loan companies, as well as private pension plans subject to federal oversight. Their stated goal is to contribute to the “safety and soundness” of the financial system in Canada.

Nowhere in their mandate mentions anything about consumers, Kyprianou points out, and there’s certainly nothing about affordability.

“The politicians can say, we’re going to get rid of B-20—they’re not going to. They might get a 30 year am[ortization] through, and all that will do is make the market busier,” he said. “Politicians focus on consumers and taxpayers. OSFI focuses on neither of those two things.”

Of course the argument is that OSFI’s concern with what’s best for the financial institutions has pushed all would-be buyers down a step on the housing market ladder, having a negative effect on affordability as well as the rental market. The question isn’t whether or not the regulations need to be changed—but whether or not we’re putting too much faith in politicians to change them.

The idea that a politician will be able to force the independent body to change their tune in order to make housing more accessible for Canadians is far-fetched at best, Kyprianou said.

“If people are thinking that B-20 and stress testing and all that’s going to be eliminated, they’re kidding themselves. And if I was a mortgage broker, I don’t know why I would be pushing for that in the first place,” he said. “The best thing that ever happened to mortgage brokers is B-20. If everybody could just go to the bank, then why wouldn’t you go direct? By introducing B-20, more people don’t qualify, or more people are anxious or stressed, they go to a mortgage professional and they make everything nice and smooth for them. I don’t know why you would be fighting something that’s giving you more business. That never made any sense to me.”

The other side of that argument is that brokers would be doing even more business if borrowers were more easily able to qualify for a home loan, and working more with straightforward, traditional products.

Everyone agrees that there will always be people who don’t qualify for a mortgage; Kyprianou puts this somewhere around 20%, based on what he’s seen in his 30 years in the business. Regardless of how the rules change, that number will still remain pretty much the same because there will still be a group of people that can’t prove their income, or have soft credit or poor credit.

Copyright © 2019 Key Media

More Canadians using FinTech but 2 things are holding them back

Thursday, October 17th, 2019

Trust in FinTech securing person data a concern

Steve Randall

FinTech services are gradually finding new customers in Canada but have two important barriers to overcome.

As challengers work hard to disrupt payments solutions and other traditional financial transactions including mortgages, a new survey from EY shows that there has been a 32% rise in the use of FinTech in Canada over the past two years with most Canadians using at least one for payments and money transfer.

“FinTech adoption has evolved significantly in Canada over the past two years alongside the evolution of customer priorities and the rise of money transfers and payments,” says Ron Stokes, EY Canada FinTech Leader. “FinTechs are no longer seen as just disrupters to the traditional financial services industry — they’re sophisticated competitors, ready to meet the changing expectations and needs of customers.”

It’s all about trust However, FinTechs operating in Canada lag their global peers in adoption rates with awareness one of the challenges for the challengers.

But a bigger issue is trust.

In EY’s 2017 survey, trust was the least cited reason for respondents not using a FinTech; in 2019 it is one of the most cited.

“Both adopters and non-adopters worry about the security of their personal data online and demonstrate greater trust in traditional institutions and providers who offer face-to-face interactions,” says Stokes.

Not that trust can’t be gained, but it is likely to mean partnering with incumbent financial institutions.

“Even though non-financial services companies have led the way in deploying new technologies to deliver innovative services while raising the bar on consumer expectations, they do not yet have the full confidence of consumers when it comes to providing financial services on their own,” says Stokes. “Our findings show that there is a trust gap that can create opportunities for both incumbent financial institutions and their FinTech competitors.”

Copyright © 2019 Key Media Pty Ltd

Toronto condo apartment sales up 11% in third quarter

Thursday, October 17th, 2019

Bouyant economic conditions boosting Toronto condo sales

Steve Randall

The buoyant economic conditions in Toronto mean more people moving to the city for work and wanting the most affordable housing options.

This has helped the condo apartment sales market in the third quarter, which gained 11.1% year-over-year according to new figures from the Toronto Real Estate Board.

TREB members reported 6,407 condo apartment sales through the MLS in Q3 while listings eased by 1% to 9,538.

“As economic conditions continue to be favourable for job growth in the Greater Toronto Area, people have continued to come to the city for work. Home ownership is important to many Canadians, and, as a relatively affordable housing option, condos in the GTA offer prospective buyers the chance to achieve their dreams of owning property,” said TREB president Michael Collins.

The tightening market put upward pressure on prices with the average price of a condominium apartment rising 5.8% to $584,564; although in the city of Toronto, which accounts for 70% of sales, the rise was slightly lower at 5.6% ($628,074).

Keeping up with demand TREB says there are still concerns about supply as the market gathers pace; CMHC data for August shows completions of condo apartments was down year-to-date compared to last year, which may have curbed investor purchases.

“Condominium apartments are obviously a popular choice amongst first-time homebuyers. Moreover, it is also important to remember that condominium apartments owned by investors represent a huge component of the GTA rental stock and certainly account for most additions to the rental stock, on net, over the past decade. With this in mind, a well-supplied condo segment will be important moving forward to ensure that we can keep up with population growth driven by a strong and diverse regional economy,” said Jason Mercer, TREB’s Chief Market Analyst.

Copyright © 2019 Key Media Pty Ltd

The Heights on Austin 344 homes in two towers – East Tower 1045 Austin – West Tower 505 Nelson by Beedie Living

Thursday, October 17th, 2019

The Heights on Austin to comprise two 25-storey towers

Simon Briault
The Province

The Heights on Austin, a project from Beedie Living, will include 344 homes.

Spectacular outlooks will be on offer at The Heights on Austin

Bathrooms will be fitted with custom mirrors, porcelain floor tiles and undermount sinks

Kitchens will have LED under-cabinet lighting and quartz counters and backsplashes

The Heights on Austin

What: East tower: 177 homes (now selling); West tower: 167 homes; 344 one- to three-bedroom homes in total

Where: 1045 Austin Avenue (east tower) and 505 Nelson Street (west tower), Coquitlam

Residence size and prices: East tower: 481 to 1,734 square feet and priced from $441,900

Developer: Beedie Living

Sales centre: 1032 Austin Ave, Coquitlam

Hours: noon — 5 p.m., Sat — Thurs

Telephone: 604-492-2882

Big changes are coming to the Austin Heights neighbourhood of Coquitlam. In recent weeks, one of Western Canada’s oldest Safeway stores was reopened on Austin Avenue after a rebuild by Beedie Living. On either side of the new 65,000-square-foot grocery store, the same developer has just broken ground on the first of two 25-storey residential towers that will be part of a major revitalization of the area.

The new development is appropriately named The Heights on Austin. But buyers of the homes won’t necessarily have to choose a plan at the top of one of these buildings to enjoy spectacular views, according to Beedie’s director of marketing and strategy, Sunny Hahm.

“Even when you’re only on the third level, you’ll already have incredible southward views of Surrey, the Port Mann Bridge and the Fraser River,” Hahm said. “Typically, you’d have to purchase something on the tenth floor or above to get any type of view.”

The east tower will be completed first and have 177 homes (out of a total of 344 for the whole project), including five three-bedroom townhomes. The west tower will include additional retail space and commercial office space.

“The accessibility that the Austin Heights area provides to the rest of Metro Vancouver is a one of the key reasons why real estate in this neighbourhood holds its value so well,” Hahm added. “You’re still very much part of a residential community, but you’re also only a five-minute drive away from any one of three SkyTrain stations… In terms of driving, you can get to anywhere in Metro Vancouver within about half an hour.”

That’s assuming you need to leave the neighbourhood, of course. The brochure for Austin Heights lists no fewer than 60 educational institutions, restaurants, shopping outlets and activities in the neighbourhood. In addition, there are 750 acres of green space within four kilometres of the site.

“Just behind our site, Ridgeway Avenue has been designated by the City of Coquitlam to be a new pedestrian area with an incredible new streetscape,” Hahm said. “It will be a beautiful promenade with cafes, restaurants and public art installations – a fully walkable neighbourhood right on your doorstep.”

Inside the homes, kitchens will feature premium Fisher & Paykel integrated appliance packages, including fridges with bottom freezers, stainless steel gas cooktops electric convection ovens. There are white upper Shaker cabinets with wood-grain lower cabinets, soft-close cabinet hardware with polished chrome pulls, LED under-cabinet lighting and quartz countertops and backsplashes.

Bathrooms will have custom mirrors and medicine cabinets, matte porcelain floor tiles, quartz countertops and undermount sinks. There are porcelain bevelled subway tiles with niches, polished chrome Grohe shower systems and adjustable shower wands in ensuites. Main bathrooms feature luxurious soaker tubs.

There are multiple plans to choose from at The Heights on Austin. East tower homes have one to three bedrooms, range from 481 to 1,734 square feet and are priced from $441,900.

© 2019 Postmedia Network Inc.

September home sales surge signals the real estate market is returning to equilibrium

Friday, October 11th, 2019

In September were up in both Toronto and Vancouver, housing prices presented a different picture

Murtaza Haider and Stephen Moranis
The Vancouver Sun

Housing markets in Toronto and Vancouver appear to be on the mend, as both gained strength over the summer and have posted a record increase in sales in the fall.

September housing sales in greater Vancouver increased by 46.3 per cent from the same month last year. A similar story emerged in greater Toronto where the September 2019 sales were 22 per cent higher than the sales recorded a year earlier.

While sales in September were up in both Toronto and Vancouver, housing prices presented a different picture. The MLS composite home price index, which captures the price of a typical dwelling over time, was up by 5.2 per cent on an annual basis in Toronto. In comparison, the index was down by 7.3 per cent in Vancouver.

While the industry has greeted the rebound with relief, the question of why sales are bouncing back now is unclear.

Some experts believe that low mortgage rates have been a factor. Also, buyers previously deterred by the stress tests might “have adjusted to the guideline in terms of the type and location of purchase, purchase price and down payment amount,” according to Jason Mercer, chief market analyst for the Toronto Real Estate Board.

Others believe that shared equity mortgages (SEM) might have contributed to the increase in sales. SEMs, which became effective in September, provide up to 10 per cent of the purchase price to a first-time homebuyer in exchange for an equity stake in the property. Proponents believe that SEMs help reduce monthly mortgage payments, which may induce housing demand by first-time homebuyers.

While the theory seems plausible, we believe SEMs are an unlikely catalyst. SEMs come with certain conditions. For one, the qualifying properties must be priced under $500,000 — a category that actually saw a five per cent decline in sales in Toronto on a year-over-year basis.

The more substantial increase in sales was observed for rather expensive properties in Toronto. September 2019 sales of homes priced between $1.25 and $1.75 million increased by more than 50 per cent on an annual basis, while those of homes priced between $900,000 and $1.25 million jumped by more than 40 per cent.

Tsur Somerville, a professor of real estate finance at the University of British Columbia, noted an uptick in sales over the summer. Houses in Vancouver’s high-demand neighbourhoods were “moving very quickly,” he noted.

Somerville pointed out that the last month’s jump in sales in Vancouver comes following a down period in September 2018, when sales relative to the year before had collapsed by 43.5 per cent. The Vancouver market, in other words, is trying to regain what it had lost over the past couple of years.

What is interesting about the sudden resurgence in sales in both Toronto and Vancouver is that it occurred during a period of strong “underlying economic fundamentals that have not changed much,” Somerville said.

Some experts believe that the converging prices of semi-detached units, condominium apartments, and townhouses in cities such as Toronto are indicative of markets approaching an equilibrium. Benjamin Tal, the deputy chief economist with CIBC World Markets, believes that the correction in low-rise housing is finally over. The pent-up demand in Toronto has brought the buyers from the sidelines resulting in an acceleration in sales and prices.

Housing markets have arrived back at a point “where we should have been,” said Tal.

The evidence that markets are returning to their long-term equilibrium is indeed getting stronger. September 2019 sales in Toronto, at 7,825 units, are similar to the sales recorded in September 2014 and 2015. At the same time, housing prices in Toronto, despite the earlier decline in sales volume, have been resilient over the past five years.

Like other economists, Tal also believes that declining interest rates have helped the recovery in housing markets. However, he cautions the markets to be prepared for an interest rate hike in 2020 or soon afterwards.

© 2019 Financial Post

New home prices rise for the first time in more than a year

Friday, October 11th, 2019

There is slight increase in the price of new housing nationally

Steve Randall
Mortgage Broker News

There was a slight increase in the price of new housing nationally in August.

Prices were up 0.1% from July, the first increase since July 2018, led by notable increases in the Sherbrooke (2.1%), Montreal (1.1%), and Trois-Rivieres (0.5%) CMAs due to higher construction costs.

Favourable market conditions reported by builders meant higher prices in the Kitchener-Cambridge-Waterloo area (1.5%), perhaps due to the strength of the tech sector and the affordability of the market relative to Toronto.

Statistics Canada data also shows that Oshawa and St. Catharines–Niagara were both down 0.4% month-over-month amid unfavourable market conditions.

Year-over-year decline
The newly-released data shows that year-over-year prices declined for a third consecutive month with August posting a 0.3% decline.

The national figure was impacted by sizeable declines in new home prices in Calgary (2.2%) and Regina (2.1%) which led the declines for the third straight month as elevated inventory weighed on prices.

Ottawa (+5.5%) and Montréal (+4.3%) saw the largest year-over-year increases in August, mostly because of the continuing trends of favourable market conditions and higher construction costs.

Out of the 27 CMAs surveyed, Ottawa has been recording the largest year-over-year increases in new house prices since May 2018.

Copyright © 2019 Key Media

Colliers makes landmark sale of Vancouver multifamily asset

Friday, October 11th, 2019

Surrey Gardens Apartment complex sold

Steve Randall
Mortgage Broker News

Colliers International is celebrating the sale of one of the largest multifamily investment assets in Vancouver.

With 3 wood-framed apartment buildings, 223 residential units, 11,000 square feet of retail, and all set in around 5.9 acres, the Surrey Gardens Apartment Portfolio sale was the first since it was constructed in 1973.

The firm held a competitive bidding process which received 10 bona fide offers from local private Investors, foreign investors and REITS within one month.

The unconditional winning bid for 100% of the freehold of the asset was negotiated by the Colliers team, led by Casey Weeks and Morgan Iannone of the Greater Vancouver Area office.

The asset is located in the St Helen’s Park neighbourhood and is within a 15 minute walk or short drive to shopping and other amenities, along with the Simon Fraser University campus.

Copyright © 2019 Key Media

Promises, promises: CEO warns election rhetoric could boost home prices

Friday, October 11th, 2019

Tunnel vision on housing could raise home prices

Kimberly Greene
Mortgage Broker News

During this federal election cycle, Royal LePage President and CEO Phil Soper said it’s encouraging that the candidates have focused so much thought and time to housing issues.

As candidates compete for undecided votes, however, Soper warns that taking a singularly focused approach without addressing all aspects of the housing picture could actually raise home prices further and hurt homebuyers, not help them.

“Well-intentioned election promises aimed at making housing more accessible and affordable to first-time buyers will fall flat if they trigger a surge in demand without a corresponding increase in the supply of homes. For example, lowering monthly mortgage payments by stretching repayment over a longer time period looks great on the surface, yet a surge in new buyers could cause prices to escalate, erasing the enhanced purchasing power,” Soper said.

The median price of a home in Canada increased 1.4% year-over-year to $630,335 in the third quarter of 2019, according to the Royal LePage National House Price Composite, compiled from proprietary property data in 63 of the nation’s largest real estate markets. When broken out by housing type, the median price of a two-storey home rose 1.3% year-over-year to $738,346, while the median price of a bungalow remained flat at $521,250. Nationally, condominiums remained the fastest appreciating housing type, with the median price rising 3.4% year-over-year to $457,911. Data analyzed contains both resale and new build transactions, provided by Royal LePage’s sister company, RPS Real Property Solutions.

Royal LePage forecasts that the aggregate price of a home in Canada will rise 1.5% year-over-year to $632,226 in the fourth quarter of 2019, which is a 0.3% increase compared to the third quarter of 2019. It should be noted that that forecast depends on there not being any new housing policy changes, which may or may not be the case after October 21st.

“Low interest rates and an outstanding employment picture continue to buoy consumer confidence and support our recovering real estate market,” said Soper. “The collateral damage from the trade war between the U.S. and China has been manageable to date. Barring a full-blown American recession, our outlook for Canada’s housing sector is for continued market expansion.”

In the GTA, the aggregate home price increased 3.7% to 858,443. There was “broad strength” across most areas in the region with the highest gains being in Pickering and Toronto, increasing 6.5% and 6.2%, respectively.

Healthy price growth in the detached segment combined with affordable new condominium developments and strengthening efforts to improve transit connectivity in some suburban areas contributed to an increase in the number of transactions, especially in the suburban 905 area code.

“The shrinking price gap between condominiums and detached properties in many areas of the GTA has encouraged some homebuyers to save for a bit longer and enter the market owning a bungalow or a two-storey home,” said Chris Slightham, president, Royal LePage Signature Realty. “We’ve also seen an increase in consumer confidence across the GTA partly because of the recent decline in the benchmark five-year interest rate, which has made single-family homes more attractive.”

Home price declines in Greater Vancouver aren’t necessarily increasing affordability, as the aggregate home price in the third quarter of 2019 was $1,194,900. Still, Randy Ryalls, general manager at Royal LePage Sterling Realty, said that they’ve seen an increasing number of homebuyers become willing to enter the market, and they expect more through the end of the year.

“Greater numbers of buyers are taking advantage of favourable market conditions and excellent mortgage rates, leading to what appears to be a solid footing in our price correction. Low unemployment, wage growth and pent-up demand are contributing to a change in market conditions that we should see emerge in the coming months,” said Ryalls.

Home prices decline in Calgary, Edmonton, Regina, and Saskatoon, however, provide great opportunities for new buyers.

“The Saskatoon real estate market continues to show signs of a recovery,” said Norm Fisher, broker and owner, Royal LePage Vidorra. “We have moved toward a balanced market as buyers are responding to the affordability of entry-level units in the area. It’s an attractive time to enter the market.”

What’s becoming clear is that a one-size-fits-all approach to housing in Canada isn’t going to be the most effective way to keep home prices from skyrocketing in some places while providing a much-needed boost for market stabilization in others. Regional differences need regional approaches, and that goes far beyond surface-level solutions and sound bytes.

“With the fastest growing population among advanced economies worldwide, providing adequate shelter for Canada’s rapid pace of household formation presents an economic opportunity and a social challenge,” Soper said. “Careful stewardship of the real estate industry and its related financial sector is critical for the health of the country’s economy and the personal wealth of Canadian families.”

Copyright © 2019 Key Media

This is the largest driver of Canada’s population growth

Friday, October 11th, 2019

Population growth continues to drive Canadian condo market activity

Ephraim Vecina
Mortgage Broker News

Much of the growth in Canada’s population and consumer base can be attributed to immigration, according to Statistics Canada.

Latest figures from the agency showed that 82.2% of the population growth seen in 2018/2019 stemmed from immigrants and non-permanent residents.

During this time frame, Canada admitted 313,580 immigrants, which was one of the highest volumes ever recorded. The number of non-permanent residents also increased by 171,536 during this period, accounting for the largest increase in Canadian history.

“While also fuelled by rapid growth in asylum claimants, this gain was mainly led by an increase in the number of work and study permit holders. Temporary immigration assists Canada in meeting its labour market needs,” StatsCan noted in its data release.

This fed into the country’s robust population growth of 1.4%, which was the highest among G7 nations. This pace was more than twice as fast as that seen in both the United States and the United Kingdom (0.6% each), and stood considerably above the rate seen in Germany (0.3%) and France (0.2%).

Population growth has been a major contributor in the nation’s steadily swelling mortgage credit load. Bank of Canada figures showed that the outstanding balance reached a new high of more than $1.59 trillion as of August, increasing by 4% annually and by 0.6% from July 2019.

This was the fifth straight month of growth in this metric. The August upswing was also 8.1% higher than the year-over-year gain seen during the same month last year.

Copyright © 2019 Key Media