Archive for the ‘Real Estate Related’ Category

Canadian Millennials are more optimistic purchasing home despite of Pandemic

Friday, September 18th, 2020

Scotiabank: Millennials hopeful about buying homes despite COVID-19

Ephraim Vecina
The Vancouver Sun

Compared to other demographics, Canadian millennials are more optimistic about purchasing a home during the COVID-19 pandemic, according to a new survey by the Bank of Nova Scotia.

The 2020 Scotiabank Housing Poll found that around 18% of young Canadians in the 18-34 age range have “accelerated their plans” to buy their next homes or investment properties. However, roughly 32% of them said that they will only make their purchases once property prices drop.

Scotiabank said that these intentions are mainly driven by lower interest rates. Approximately 68% of those planning to buy will be using their savings, while 42% will be using the equity from their primary homes.

Millennials were also more optimistic (36%) about home price declines within the next 12 months, compared to 24% of those in the 35-54 age cohort and 17% of those older than 55 years old.

Additionally, better purchasing power fed into a greater appetite for renovations, with around 26% of Canadians considering major reworks in their current homes.

“The pandemic has caused many Canadians to turn their living rooms into classrooms, their dining rooms into offices, and their basements into home gyms,” said John Webster, head of real estate secured lending at Scotiabank. “This is motivating many to consider investing more in their current homes or re-evaluating their living spaces altogether.”

 

 

 

Copyright © 2020 Key Media

Renters are facing the threat of eviction during Pandemic

Friday, September 18th, 2020

East Vancouver tenants threatened with eviction by indebted developer

Ephraim Vecina
Mortgage Broker News

Tenants in East Vancouver are being pushed out to make way for a residential project, but the developer is allegedly saddled with hundreds of millions in unpaid loans.

Renters in the area’s Connacher House and The Carolina apartments are facing the threat of eviction, after developer PortLiving began purchasing properties in the vicinity starting 2018.

Among PortLiving’s plans for its upcoming six-storey Midtown Heritage residential building is to refurbish The Carolina and relocate the Conacher House to an area previously occupied by a soon to be demolished depot, News 1130 reported.

But the Vancouver Tenants Union said that PortLiving is adhering to just the “bare minimum” of the city’s tenant welfare policies.

“We’re in the middle of a pandemic. There’s no rush to get these tenants out,” said Vince Tao, a member of the union’s steering committee. “What we want, really, is PortLiving to come to the table and give these tenants extra time.”

PortLiving said that it has “worked very hard with these tenants on solutions,” and that it has offered tenants six months’ worth of free rent. The developer also said that it has provided referrals to help them relocate.

But doubts about the developer’s ability to follow through on its promises are strong: Less than half a year ago, PortLiving founder Macario Reyes said in a sworn affidavit that the company did not have the ability to pay more than $400 million in loans. The document also pointed to an estimated $46 million owed to CMLS Financial and Aviva Insurance.

Nelia and Wilfredo Guevarra, both residents of The Carolina for more than 24 years, said that they have received a letter to vacate the property by the end of September. They also said that the developer has threatened them with a court bailiff “to enforce the eviction if necessary” – a move that the couple called “inhuman” considering the prevailing COVID-19 pandemic.

Business tenants were not left unscathed. Andrew Lee, owner of the nearby Mt. Pleasant Return-It Depot, said that PortLiving has ignored his requests for a grace period while he’s setting up his new location.

“I’ve tried to really work with them and tried to be reasonable; I thought they were reasonable,” Lee said. “It’s just really heartbreaking, and they have no mercy.”

 

Copyright © 2020 Key Media

Mayor Kennedy Steward viable plan for affordable homes in Vancouver

Friday, September 18th, 2020

A look at Mayor Kennedy Stewart’s plan for creating affordable homes in Vancouver

Clayton Jarvis
Mortgage Broker News

On Monday, Vancouver mayor Kennedy Stewart announced an ambitious plan intended to “make Vancouver affordable for the middle class.” The Making HOME (Home Options for Middle-income Earners) initiative would allow for a single-family home to be redeveloped into four smaller homes so long as one is reserved for households making $80,000 a year.

“The house would look like any other house, except it might have four front doors. Three for families that make around $150,000 a year (like two teachers, or an accountant and a tradesperson). And one door reserved for middle-income earners – forever,” reads the recently launched Making HOME website.

Stewart brought the plan to Vancouver city council on Wednesday. His proposed guidelines for rolling out Making HOME as a pilot project involving 100 lots in neighbourhoods zoned for single-family detached homes and duplexes are expected to be delivered to city council by the second quarter of 2021.

“I see a future where families are no longer pushed out of town because their only two options are a condo or a multi-million-dollar house,” Stewart said during a September 14 media briefing.

In his presentation to reporters, Stewart compared the scenario facing buyers in Vancouver today to that of a post-Making HOME environment. Whereas 2.5 percent of residents can currently afford to purchase a home in Vancouver (the average home price in East Van is about $1.4 million), he says Making HOME would make ownership attainable for 50 percent of local residents.

As Stewart explained, the owners of the three “market properties” would each need to earn $135,000 and provide a $110,000 down payment. The middle-income household, the one earning $80,000 a year, would need to provide a $65,000 down payment.

The homes in question won’t exactly be cheap. A case study by zoning-reform advocate Darrell Mussatto determined that three 924-square foot “market homes” on a four-home lot would sell for approximately $1.1 million each, with the remaining 900-square foot property selling for around $450,000.

 

Mixed reactions

Stewart’s plan has received somewhat mixed reviews. Canada Mortgage and Housing Corporation CEO Evan Siddall thanked Stewart for his “leadership on housing affordability” in a September 15 tweet.

“Densification is our most powerful tool to accelerate the supply of more affordable housing,” Siddall wrote. “This is exactly the kind of innovation our cities need.”

Abundant Housing Vancouver’s Jennifer Bradshaw told CBC that Stewart’s plan will help “some” Vancouverites, but she is concerned that it will ultimately fall short in its goal of providing affordable homes to half the city’s residents.

 “There just aren’t going to be enough available,” she said.

Pemberton Homes Oak Bay realtor Vanessa Roman applauds Stewart for his outside-the-box thinking, but she sees Making HOME as more of a “campaign ploy for the 2022 civic election, rather than a viable solution to increase housing affordability.”

Roman says the proposal’s primary shortcoming is not requiring a higher percentage of affordable homes per lot. In her eyes, the ratio of three market-value homes to one affordable unit (larger lots can house six homes so long as two are kept for middle-income earners) won’t inject enough affordable stock into the city’s housing supply.

“If Mayor Stewart actually wanted to help solve the problem, he would increase the minimum number of required affordable units from one to four, leaving only two units to be sold at market value,” she says. “This ratio means a majority of new units would be offered, and kept, at below market value, which helps to curb rapid increases in land value and increases housing affordability for middle-income earners in Vancouver.”

 

Copyright © 2020 Key Media

Fed would keep near 0% rates for the foreseeable future

Thursday, September 17th, 2020

Fed could keep rates near zero through 2023

Ryan Smith
other

BC Real Estate investment decline to its lowest level since 2015

Thursday, September 17th, 2020

Avison Young: BC real estate investment at its lowest since 2015

Ephraim Vecina
Mortgage Broker News

Investment in British Columbia’s commercial real estate in the first half of 2020 declined to its lowest level since 2015, bringing an end to a strong four-year run, according to a new report by Avison Young.

A total of 84 deals valued at $1.5 billion were completed during the first six months of the year. This was far below the levels seen from 2016 to 2019, which saw first-half investment in office, retail, and industrial assets exceed $2.7 billion in each category.

Avison Young said that COVID-19, which was declared a global public health emergency in March, triggered this “partial pause” in the investment market, with private investors dominating the deals.

On a brighter note, however, “deal velocity in first-half 2020 remained comparable to previous years and actually marked the fourth highest number of completed deals on record,” Avison Young said in its study. “Only the first halves of 2019 (85), 2018 (102) and 2017 (109) recorded a greater number of transactions than 2020.”

By asset class, the largest dollar volume went to industrial investment ($644 million), followed by office ($629 million), multi-family ($620 million), and retail deals ($223 million).

The report said that this “marked the first time that industrial sales led all asset classes in terms of total dollar volume in a half since Avison Young started tracking the market in 1998.”

Industrial properties also represented the bulk of transactions completed (44 deals), amounting to 52% of total deal volume during the first half of 2020. Meanwhile, retail assets had their lowest first-half level (25 deals) since 2011.

“Investors and owner-occupiers remained focused on acquiring properties in what many consider as the most appealing and sought after commercial real estate asset class in 2020,” Avison Young said. “Industrial assets, particularly those related to logistics/distribution and last-mile warehousing, were already in high demand due to shoppers’ ongoing embrace of e-commerce, but the arrival of COVID-19 triggered an even more rapid shift in consumer shopping patterns in a matter of months (if not weeks), further driving demand for industrial assets.”

 

Copyright © 2020 Key Media

CREA: Home price shot up by 18.5%

Thursday, September 17th, 2020

Royal LePage CEO: Supply shortage pushed home prices up 18.5%

Ephraim Vecina
Mortgage Broker News

Inventory shortages in major urban markets triggered an “unhealthy” spike in home prices in August, according to Phil Soper, chief executive officer of Royal LePage.

Latest figures from the Canadian Real Estate Association showed that at present, it would only take 2.6 months to sell all the residential listings in the national market. The national average home price shot up by 18.5% annually last month, exceeding $586,000.

“Both number of homes people are buying and the number of newly listed homes are rising significantly,” Soper told The Canadian Press. “This cannot hide the fact that August 2020 was the worst on record for available housing.”

To see the influence of the largest markets and their inventories, the national average will be approximately $122,000 lower if Greater Toronto and Greater Vancouver are not taken into account, CREA data indicated.

The largest price increases in August were seen in Ottawa, Montreal, and Moncton, while little to no movement was observed in Calgary, Edmonton, and St. John’s, CREA said.

Sales grew by 6.2% from July and by 33.5% year over year, with the strongest activity seen in the GTA and BC’s Lower Mainland area.

“One change in August is that some regional disparity is starting to show again, after all markets were rebounding in unison in recent months,” said Robert Kavcic, senior economist at BMO. “[Sales] were driven by gains in Toronto and surrounding markets, as well as Vancouver/Victoria, but others like Calgary and Regina have ebbed… We suspect this regional split will re-establish itself as the dust settles.”

 

Copyright © 2020 Key Media

Canadian inflation rate remains firm in August

Thursday, September 17th, 2020

Annual inflation rate unchanged in August

Ephraim Vecina
Mortgage Broker News

The Canadian annual inflation rate was static at 0.1% in August, with rising food prices counteracted by weakening gasoline costs, according to Statistics Canada.

An earlier poll by Reuters predicted that the rate would stay at 0.1%, essentially unchanged from the July reading. This was far below the Bank of Canada’s 2% target, and lower than even the modest 0.4% year-over-year increase projected by economists in a Refinitiv survey.

Meanwhile, the average of Canada’s measures for core inflation was at 1.7%.

Earlier this month, the BoC kept its key policy interest rate at its effective lower bound of 0.25%, and said that it will maintain this level until inflation reverts to the central bank’s target.

Among the goals of the policy is to stimulate more borrowing due to lower rates across the board. BoC Governor Tiff Macklem said that the financial system’s recovery hinges on Canadians getting back most of their purchasing power through stronger employment numbers.

“Incomes have been reasonably well-sustained, consumption has slowed, and so savings overall in the economy have gone up. That’s helpful in reducing vulnerabilities,” Macklem said. “Having said that, we’ve been very clear at the Bank of Canada, we’ve underlined the vulnerabilities caused by household indebtedness and too much reliance on the housing sector. Those have not entirely gone away, but when you look at our policy response, the best predictor of whether somebody is going to repay their mortgage is whether they have a job.”

Macklem said that this is largely due to COVID-19’s unprecedented economic impact, which will last far beyond the current crisis.

“The recovery will likely be prolonged and bumpy, with the potential for setbacks along the way,” Macklem said. “If, as we expect, supply is restored more quickly than demand, this could lead to a large gap between the two, putting a lot of downward pressure on inflation.”

A recent Finder survey has found that 95% of economists believe that the BoC rate will stay at 0.25% for longer than a year. Around 75% of those polled also said that the rate will not begin moving again until late 2022 or even well into 2023.

 

Copyright © 2020 Key Mediia

As Pandemic goes on, what should Canadians strategic plan with their U.S. properties?

Thursday, September 17th, 2020

As COVID-19 drags on, what should Canada’s snowbirds do with their U.S. properties?

Clayton Jarvis
Mortgage Broker News

B.C Multi-family rental building insurance increase while raise rents is frozen

Wednesday, September 16th, 2020

Landlords squeezed as insurance premiums skyrocket

Frank O’Brien
Mortgage Broker News

Opendoor a distruptive online marketplace for buying and selling houses

Tuesday, September 15th, 2020

Palihapitiya finds next ?10x idea? with $4.8 billion SPAC deal for real estate start-up Opendoor

Leslie Picker
other

 Chamath Palihapitiya pioneered taking private unicorns public by reverse merging them into special purpose acquisition companies — an idea he’s called “IPO 2.0.” 

After his first iteration of doing so last year with space-tourism company Virgin Galactic, he’s found his next target: Opendoor, an online marketplace for buying and selling houses. 

“These guys are my next 10x idea,” Palihapitiya said in an interview with CNBC, noting the prospect of generating returns worth 10 times the original investment. 

The investment, announced Tuesday, amounts to more than $1 billion. Opendoor will receive $414 million from the capital generated from the April initial public offering of his SPAC, Social Capital Hedosophia II. Additionally, a group of investors, including Palihapitiya and funds managed by BlackRock, agreed to infuse another $600 million through a PIPE, or a private investment in public equity. 

The deal values Opendoor at $4.8 billion — nearly equal to its 2019 revenue. The company’s earlier investors include General Atlantic, SoftBank’s Vision Fund and Lennar Corp. 

 “This is one of many milestones towards our mission and will help us accelerate the path towards building the digital one-stop-shop to move,” Eric Wu, who founded Opendoor six years ago, said in a statement. Wu will continue to lead the company, while Adam Bain, former chief operating officer at Twitter and director at Social Capital Hedosophia II, will join the board after the transaction is completed. 

 

How Opendoor works

Here’s how Opendoor often works: Homeowners get a quote, through an algorithm, and can sell their houses directly to the company. Opendoor may make some fixes and then put the house on the market to sell. The spread between what the home is bought for and sold is a part of how Opendoor generates revenue. Opendoor, which operates in 21 markets, says it sold more than 18,000 homes last year. 

It also provides services, such as a mortgage product, home repair and home warranty that users can purchase. (Opendoor ranked No. 35 on last year’s CNBC Disruptor 50 list.)

 “The company is transforming the $1.6 trillion residential real estate market by combining superior user experience, streamlined operations and machine learning to create a seamless digital experience,” said Palihapitiya, CEO of Social Capital Hedosophia II. 

The move is a bet on two secular tailwinds — greater homeownership in America and the digitization of commerce. 

Sales of existing homes jumped nearly 25 percent in July from June, according to the latest National Association of Realtors report. That’s the strongest monthly gain in the history of the survey, going back more than half a century.

But earlier this year, the pandemic and shutdown of the economy took its toll on the housing market. The company in April laid off 600 employees or roughly a third of its staff as the uncertainty caused many Americans to pause housing-related transactions. 

Around that same time, Palihapitiya was getting his SPAC off the ground. Virgin Galactic, which he took public through a separate vehicle, has produced returns of nearly 70 percent over the last year.  

Social Capital Hedosophia II used that momentum in its search for a new target. Shares surged 34.5% on Tuesday following the announcement.

The deal for Opendoor came together somewhat quickly, a person close to the process said. Two months ago, the two sides started talking. 

And much like Opendoor’s digitized tenor, so too was its own sale, with the bulk of the negotiations taking place over the internet. 

 

 

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