Near-10-acre Abbotsford development site sells for $5.5 million

Western Investor

Located in the emerging McKee Peak residential area, the land is destinated for ground-oriented housing, as single-detached houses, row houses or townhouses.

Frontline Real Estate Services, Surrey, B.C., for Western Investor

 

Property type: Development land

Location: 36160 McKee Road, Abbotsford, B.C.

Size of land: 9.96 acres

Potential: Residential development

Sale price: $5.5 million

Date of sale: October 14, 2022

Brokerage: Frontline Real Estate Services, Surrey, B.C.

Brokers: Megan Johal, Adam Lawrence and Justin Mitchell.

 

© 2023 Western Investor

Canadian home prices expected to drop 12%

Milounee Purohit
other

`It’s a necessary correction to restore affordability’

Average home prices have already fallen roughly 15 per cent from an early 2022 peak.

The drop in home prices in Canada this year will be steeper than forecast three months ago but mild compared with a historic run-up during the COVID pandemic, leaving many first-time buyers still priced out of the market, a Reuters poll showed.

Following nearly a year of mostly aggressive interest rate rises from near-zero that the Bank of Canada has only recently set on pause at 4.50 per cent, mortgage rates have soared over 170 basis points, restricting activity in the once red-hot market.

Average home prices in Canada have already fallen roughly 15.0 per cent from their early 2022 peak and are forecast to drop 12.0 per cent this year, according to the median view from a Feb 15-28 poll of 13 housing experts.

That is slightly more severe than the 10.0 per cent fall predicted in a November survey.

But that expected decline is dwarfed by the more than 50 per cent rise during the height of the pandemic, and is a very small fraction of prices that roughly tripled over the past two decades, suggesting the dream of owning a home will remain out of reach for many prospective first time buyers.

While most analysts said such a fall in house prices would improve affordability somewhat, others said they needed to drop a lot more to make any difference.

“We think in normal times a 30 per cent house price decline would be a crash, but in this context of what we’re coming from with the two-year surge, it’s a necessary correction to restore affordability,” said Tony Stillo, a Canadian director at Oxford Economics.

Asked how much average house prices would fall from peak to trough, the median response was 20.0 per cent, more than the 17.5 per cent predicted in the November poll. The range of forecasts varied from 12.5 per cent to 30.0 per cent.

House prices in Toronto and Vancouver, front runners in the recent house price boom, were forecast to drop 15 per cent and 12 per cent, respectively, in 2023, compared with rises of over 50 per cent and 30 per cent during the pandemic.

Without a large correction, prospective homeowners will continue renting. A strong majority, 7 of 10 analysts, said home ownership would decrease over the next two to three years.

“Of course, the Canadian housing market is rarely `affordable’ for many potential first-time buyers,” said BMO Capital Markets chief economist Douglas Porter.

 

© Pressreader

Bank of Canada to hold rates steady in 2023, budget watchdog says

Ismail Shakil
The Vancouver Sun

The central bank has raised rates at a record pace over the past year to tame inflation that hit a four-decade high of 8.1% in June.

Governor of the Bank of Canada Tiff Macklem walks outside the Bank of Canada building in Ottawa, June 22, 2020. Photo by Blair Gable / Files /REUTERS

OTTAWA — The Bank of Canada will hold its key policy rate at the current level of 4.5% until the end of this year and will start cutting rates in January 2024, Canada’s independent budgetary watchdog forecast on Thursday.

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The central bank has raised rates at a record pace over the past year to tame inflation that hit a four-decade high of 8.1% in June.

After its last hike in January, the Bank of Canada became the first major central bank fighting global inflation to say it would likely “pause” further moves as long as prices continue to come down as it has forecast.

“We expect the Bank of Canada to maintain its ‘pause’ through to the end of this year,” Parliamentary Budget Officer (PBO) Yves Giroux said in a report. “With CPI inflation on track to return to its 2% target, we then expect the Bank to start lowering its policy rate early next year.”

Canada’s budgetary watchdog said it expects interest rates to fall to 2.5% by December 2024.

While money markets still expect that the central bank will keep its benchmark rate unchanged at next week’s policy announcement, they are pricing in additional tightening later in the year.

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Canada’s economy will stagnate this year as tighter monetary policy takes hold, the PBO projected.

“Following a stronger-than-expected performance in the second half of last year, we project the Canadian economy to effectively stagnate over the course of this year,” Giroux said.

Economic data have been mixed since the central bank signaled the pause, with a blowout jobs report in January showing continued labor market tightness, while inflation and GDP data have been more muted.

 

© 2023 Vancouver Sun

Home sales in Vancouver area up 77% from January, but lag behind last year’s numbers: real estate board

The Canadian Press
CBC Radio

The downtown Vancouver skyline pictured on Dec. 21, 2022. The Real Estate Board of Greater Vancouver says its recent sales numbers reflect a continued reluctance from prospective home sellers to list their properties. (Darryl Dyck/The Canadian Press)

The Real Estate Board of Greater Vancouver says the number of homes sold in February was up 76.9 per cent from January, but down 47.2 per cent compared to the same month last year.

The board says sales for the month in the area it covers totalled 1,808, down from 3,424 in February 2022 and roughly 33 per cent below the 10-year February sales average.

The board says the numbers reflect a continued reluctance from prospective home sellers to list their properties, pushing sales well below historical norms.

However, the total number of homes listed for sale in the region has continued inching upwards, moving up by 16.7 per cent from February 2022 and 5.2 per cent from January 2023.

There were 3,467 new listings last month, a 36.6 per cent decrease when compared with February 2022, but a 5.2 per cent increase when compared with January 2023.

The composite benchmark price for all residential properties hit $1,123,400, a 9.3 per cent drop compared to the same month last year but a 1.1 per cent increase over January.

“While we continue to expect home price trends to show year-over-year declines for a few more months, current data and market activity suggest pricing is firming up,” said Andrew Lis, the board’s director of economics and data analytics.

“In fact, some leading indicators suggest we may see modest price increases this spring, particularly if sales activity increases and mortgage rates hold steady.”

Areas and municipalities covered by the Real Estate Board of Greater Vancouver include: Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver and Whistler.

 

©2023 CBC/Radio-Canada. All rights reserved.

Kelowna 3.3 acres of industrial sold as a sale-leaseback

Western Investor Staff
Western Investor

Seller sold the land for $7.3 million and will continue to operate business as the new owner prepares redevelopment.

William Wright Commercial, Vancouver, for Western Investor

 

Property type: Industrial

Location: 9340 & 9360 Balser Court, Kelowna. B.C.

Land size: 145,055 square feet.

Land size in acres: 3.3 acres

Price: $7.3 million

Brokerage: William Wright Commercial, Vancouver (buyer’s agent); Colliers, Vancouver (seller’s agent)

Brokers: Shelby Kostyshen, Willliam Wright, and Eric Weber, Collers.

 

© 2023 Western Investor

Leading indicator spots slowing of ‘highly abnormal’ CRE market

Western Investor Staff
Western Investor

Quarterly index reveals dip in commercial real estate sector late in 2022 as it continued a six-month downward trajectory

Courtesy: BC Real Estate Association.

British Columbia’s “highly abnormal” commercial real estate market is slowing, according to the BC Real Estate Association’s (BCREA) commercial leading indicator (CLI), a quarterly snapshot of performance.

In the fourth quarter of 2022, the CLI dropped to 148 from 149, and the six-month moving average continued its downward trajectory.

Compared to the same quarter in 2021, the index was down by 2 per cent.

“It is important to note that the environment for commercial real estate remains highly abnormal and uncertain,” the. BCREA stated.

The CLI is designed to interpret economic and office employment growth as positive indicators for commercial real estate demand. However, the recent strong growth in these indicators may not translate as readily into improved commercial real estate market conditions due to structural changes in the economy caused by the COVID-19 pandemic, the Association explained.

The decline in the CLI during the fourth quarter was mainly attributed to a deterioration in the economic activity component of the index.

“Our research shows that the variables that compose the CLI reliably forecast B.C. commercial real estate activity at a lag of two to four quarters.” the BCREA stated.  

The economic activity index was driven downwards by inflation-adjusted wholesale trade, retail, and manufacturing sales declines. High inflation has meant that real or inflation-adjusted figures are still negative despite solid nominal growth.

 The index’s employment component was slightly negative as shrinking office employment offset rising manufacturing employment.

Spreads between corporate and government borrowing costs also rose slightly from the prior quarter, contributing negatively to the financial component. However, rising real estate investment trust prices cancelled this out, causing the financial component to have a zero net effect on the commercial leading indicator, according to the BCREA.

 

© 2023 Western Investor

Vancouver 6,000-square-foot Crosstown site sells for $9.5 million

Western Investor Staff
Western Investor

Lot on West Pender Street has current commercial income potential and is approved for a mixed-use of retail, office and 16 units of residential rentals

Corbel Commercial Inc., Vancouver, for Western Investor

 

Property type: Redevelopment site

Location: 41 West Pender Street, Vancouver

Lot size: 6,000 square feetZoning: CD (Comprehensive development).

Floor space ratio: 5.5 FSR (proposed

Gross building area: 40,762 square-feet (proposed).

Sale price: $9.5 million

Brokerage: Corbel Commercial Inc., Vancouver

Brokers: Marc Saul and Robert Tham

 

© 2023 Western Investor

76 acres on Saturna Island, B.C., sold for $1 million

Western Investor Staff
Western Investor

Conservation group, federal government, acquire waterfront bluff to protect rare fauna and wildlife.

Bluff home to rare swallow and fauna. Native Trust of B.C. for Western Investor

 

Property type: Conservation site

Location: Saturna Island, B.C.

Size of land: 76 acres (approx.)

Price: $1 million

Buyer: Native Trust, B.C., Victoria, B.C., (with sponsors and Canadian government.)

 

© 2023 Western Investor

Don’t look now but Vancouver’s home sales are heading back up

Frank O’Brien
Western Investor

After posting dismal numbers in January, early February data suggests sales are gaining strength and active listings are increasing

Mid-February housing sales in Greater Vancouver were up 162 per cent compared to the same period in January 2023.| Western Investor

Early sales data from the Real Estate Board of Greater Vancouver (REBGV) and anecdotal reports from the street suggest that a nine-month slide in the housing market may be coming to an end.

And, despite fears of a listing shortage, there were 8,072 homes of all types for sale as of mid-February, which is about one-third higher than in February of last year before the first of eight straight interest rate increases began.

The market bottom may have been seen in January 2023, when residential sales through the REBGV plunged down more than 55 per cent from a year earlier and were down 21 per cent from a month before, to just 1,022 transactions.

January sales were 43 per cent below the 10-year January sales average.

Things have changed this month.

At the mid-point of February, there have been 878 sales in Greater Vancouver, far higher than the 334 that had sold at the mid-point of January, and about 100 more sales than the mid-point of November and December of last year, REBGV data reveals.

“The numbers show a definite shift in activity, and the shift is also heard in the chatter amongst realtors, who are commenting on the number of offers being received on new and existing listings,” said Kevin Skipworth, managing partner at Dexter Realty in Vancouver.” Sales are picking up; showings and open houses are busier.”

Skipworth noted that one premier Richmond condo listing attracted 11 offers.

Data for the first two weeks of February shows the sales-to-new-listing ratio hit 48 per cent, double the level in January, when just 24 per cent of new listings sold. This means that, so far this month, nearly one of every two new listings found a buyer.

There is a correlation to the sales ratio and home prices, according to the REBGV. Generally, home prices experience upward pressure when the sales-to-listing ratio surpasses 20 per cent over several months, and prices decline when the ratio is consistently below 12 per cent.

Based on REBGV mid-February data, which Dexter Realty released to Western Investor, the following are among markets with the most sales action.

• Burnaby North, Burnaby South and Coquitlam posted more sales in the first two weeks of February than in all of January 2023.

• Vancouver East saw the sales-to-new-listing ratio for condominium apartments hit 69 per cent so far in February.

While a two-week sales increase may not be a harbinger of a long-term recovery of housing sales, the BC Real Estate Association is forecasting that 2024 will be a banner year for residential real estate right across the province.

“We expect a strong recovery, boosted by an expected decline in mortgage rates and record high immigration that will carry significant momentum into 2024,” said BCREA Chief Economist Brendon Ogmundson.

The Bank of Canada has also hinted that its 25-basis-point increase in lending rates on January 25 may be the last one for this year.

Skipworth suggests that the stronger February sales may reflect that some homebuyers and investors see 2023 as a “positioning year” in expectation of higher prices and demand in 2024.

 

© 2023 Western Investor

 

Metro Vancouver’s rental vacancy rate drops as demand, prices soar: CMHC

Claire Wilson
Western Investor

The rate for purpose-built rentals in the region fell below one per cent last year, while the average asking rent for vacant units is 43 per cent higher than occupied ones

Rents for vacant units in Metro Vancouver increased more sharply than those of currently tenanted units over the past year, CMHC reported.

Metro Vancouver’s purpose-built rental vacancy rate fell below one per cent in 2022 as rental demand outpaced supply, according to Canada Mortgage and Housing Corp.’s (CMHC) Market Rental Report.

High homeownership costs and migration to the Metro Vancouver area drove rental demand in 2022, according to the CMHC. As a result, the purpose-built rental apartment vacancy rate decreased from 1.2 per cent in 2021 to 0.9 per cent in 2022.

Increases in mortgage rates also contributed to the decline in availability, as more renters had limited capacity to transition to homeownership, according to the report.

“Strong demand for limited rental units means low vacancy rates, rising rents and growing inequality between long-term leaseholders and newcomers,” said Eric Bond, senior specialist with CMHC.

According to the report, international arrivals to B.C. doubled in the first half of 2022, with most of newcomers settling in the Metro Vancouver region.

As migration into the province surged, the borrowing capacity of a Vancouver worker aged 25 to 54 making an average wage decreased by nearly a quarter, or about $100,000, in 2022, said the report – further compounding the issue.

Overall average rent, including both units that are occupied and units that are vacant, increased by 6.3 per cent compared to the previous year, according to Bond.

The gap between rents for vacant units and paid-for occupied units also widened last year as average asking rents for vacant purpose-built rentals soared. The average asking rent for a vacant unit was 43 per cent higher than the overall average rent for occupied units, the report said. In 2021, the gap was 10 per cent.

Last year, the average monthly price to rent a two-bedroom purpose-built rental in Metro Vancouver rose 5.6 per cent year over year to about $2,000. The average cost to rent a condo is approximately $2,500 per month.

Bond said that new renters paid on average 24 per cent more than the previous tenant for a two-bedroom unit in Metro Vancouver. When a unit turns over to a new tenant, the landlord can set a new rental amount that reflects the current market, he said.

“When demand is exceeding supply, we have some adjustment that can take place when those units do turnover. And one consequence of this is that it provides a disincentive to moving and so we noted a lower turnover rate as well,” Bond said.

In Metro Vancouver, the turnover rate is now 10.7 per cent, one of the lowest in the country, he said.

Despite the decline in vacancy, 3,805 purpose-built rental units were added to the regional market in 2022 – the highest annual increase since 1990, according to the CMHC. Four municipalities accounted for 87 per cent of this increase – Vancouver, Coquitlam, the City of North Vancouver and the District of North Vancouver.

“The vacancy rate went down and we’re seeing strong increases in rents, which means that demand is just that much higher. We’ll need to keep building more market rental, non-market rental and more affordable units in the coming years in order to meet the demand and have the housing system work well in terms of meeting the needs of renter households,” Bond said.

Despite the low vacancy rate for purpose-built rentals, the number of available condominiums for rent increased by 7,850 units, roughly 9.8 per cent. The increase in units resulted in an overall vacancy rate for condominiums that sits at 2.2 per cent in 2022, according to the report.

 

© 2023 Western Investor