CONDO CONUNDRUM

Steve Kupferman
other

Until recently, a condominium apartment in Toronto was a near- foolproof investment. And then came March 2020, and COVID- 19.

Since the start of the pandemic, resale condos in Toronto and other Canadian cities have tended to stagnate in value, even as prices of other housing types have stabilized or surged. As the year ends, and with post- pandemic life in sight, real estate watchers are wondering: what will it take for condo markets to return to normal?

There are a few prevailing theories as to why many of Canada’s urban condo markets have struggled during the pandemic. All of these theories revolve around the ways COVID- 19 has changed life in cities.

The collapse of the short- term rental market is one likely culprit.

“People had these investment properties that they were renting out as ghost hotels on Airbnb,” says Scott Ingram, a Toronto real estate agent. “And then all of sudden the pandemic happens and their revenue goes to zero. Then you get a flood of long- term rentals.”

While long- term rental supply was increasing, virus- related travel restrictions were decimating immigration to Canada, diminishing the pool of potential tenants.

And then there was the work from- home factor, which may have caused some downtown dwellers to rethink plans to live, or continue living, in tiny apartments. In Ontario, as of 2017, the median size of a newly built condo apartment was just 665 square feet.

Canada’s condo markets have been affected in different ways. In Vancouver, November’s modest condo price increases were outshone by detached homes, which notched double- digit percentage year- over- year gains. In Montreal, condo sales volumes and median prices this fall have actually outpaced 2019, but single- family homes have been appreciating in value much more quickly. In Calgary, condos posted a year- over year decline in average resale value in November, even as the prices of semis and detached homes climbed.

But no Canadian condo market has felt the effects of the pandemic more sharply than that of Toronto. The toll of the virus is best explained in terms of “months of inventory” — a measurement of the number of months it would take to sell every condo currently on the market, if the current number of buyers were to remain the same.

For four years, beginning in 2016, the Toronto resale condo market was chronically undersupplied. The availability of resale condos bottomed out in March 2017, at 0.6 months of inventory. For the next few years, Toronto almost never had more than two months of condo inventory. But all that changed in April, the first full month after the onset of the pandemic. The city’s condo market instantly accumulated nearly four months of inventory, as listings increased. At the end of November, new listings continued to outstrip demand.

The buildup in inventory has been particularly significant in Toronto’s downtown, where condo apartment supply, as of the end of November, was higher than the city average, at 4.7 months of inventory. The average resale price of a condo in the core was down nearly eight per cent, year- overyear. Citywide, average condo prices were down three per cent, even as other housing types made impressive gains. For instance, in the city’s 905 suburbs, where housing markets have been especially buoyant this fall, the average price of a detached home was up 19.2 per cent, year- over- year.

If the first round of vaccines is widespread and effective enough to stop all the COVID- 19 related headwinds from blowing, it’s likely, some argue, that urban Canada’s resale condo markets will stop lagging other types of housing.

“Once things go back to normal and you’re not so nervous to be in an elevator with someone, I can’t see how this trend isn’t going to reverse itself,” says Shaun Cathcart, senior economist at the Canadian Real Estate Association.

Cathcart also points out that the current condo situation only looks dire in comparison to the heated condo- market conditions of early 2020. “We were looking at the tightest market conditions almost ever,” he says. “There’s a lot of runway for those conditions to unwind before they become problematic.”

The Toronto condo market may have been particularly vulnerable because of its high levels of investor activity. A 2018 analysis by the real estate research firm Urbanation found that 48 per cent of newly completed condo units in the Greater Toronto Area were sold to people who intended to hold them as investments and rent them out, rather than live in them.

John Pasalis, president of Realosophy Realty, has noticed signs that investors are already beginning to return to the Toronto condo market. “We’ve seen a big turnaround in the past six weeks or so,” he says. “Big demand and interest from investors who are looking at the decline in prices in the downtown core and seeing that as a buying opportunity. Condos that were sitting on the market for a while are suddenly selling really quickly.”

Royal LePage expects Toronto condo prices to eke out 0.5 per cent gains in 2021, compared to a 5.75 per cent average gain across the city’s different property segments. Condos are also expected to underperform other segments in Vancouver and Montreal.

“The huge baby boomer demographic began post- children migration to suburban and recreational- style communities in the middle of the last decade, and material numbers of the equally populous millennial generation have been exiting city centre condos in search of space as they began families,” Phil Soper, CEO of Royal LePage, said in a Dec. 14 forecast.

 

© Copyright 2020 Canada News

B.C. will lead West in 2021 construction pace

Frank O?Brien
Western Investor

A surge in private development and ongoing mega-projects in the resource arena will rank British Columbia as a leader in construction spending growth into 2021, according to a national study by BTY Group.

The international consulting firm predicts B.C. will post at least a 5 per cent increase in construction expenditures next year, matching Ontario and Quebec and leading all Western provinces.

While much of B.C.’s growth will come from giant resource projects, new infrastructure spending and mixed-use development projects will also add to the construction acceleration into 2021 and beyond, the consultancy says.

The study notes that non-residential activity in B.C. increased 6.9 per cent in 2020 as work on the $11 billion liquefied natural gas (LNG) terminal at Kitimat continued.

Other major projects, such as the Trans Mountain oil pipeline, the CoastLink gas pipeline, BC Hydro’s Site C power project, the upcoming Patullo Bridge replacement across the Fraser River and the $2.8 billion SkyTrain extension along Broadway in Vancouver “will keep activity levels high and labour availability tight over the next few years”, the study says.

“New highway and multiple hospital construction projects will add a further push to bump up [infrastructure] construction levels by 15.4 per cent in 2021 and sustain growth at high levels over the next few years,” the report states.

Residential construction, much of it in mixed-use projects, will add to B.C.’s building pace.

This was underlined in November, when the value of B.C. residential building permits soared 28 per cent from a month earlier, the largest gain in the country. At $6.4 billion, the November tally was the highest monthly level for residential permits in B.C. history, according to Statistics Canada.

BTY Group predicts that B.C. housing starts will increase from 35,300 in 2020 to 36,300 in 2021, which is higher than the combined projected starts in all other western provinces next year.

Major B.C. projects that include multi-unit housing either underway or starting in 2021 include the City of Lougheed development on the Burnaby-Coquitlam border and the redevelopment of the Oakridge shopping centre in Vancouver, plus large mixed-use projects in Victoria and Kelowna.

The BTY outlook for the Prairies is less bullish, noting that most increases are tied to government stimulus spending.

Alberta: The second sharpest economic contraction among provinces will prolong the return of construction to pre-2020 levels. The bright spot is rapidly growing private-sector investment in renewables, the report says, and an 8 per cent increase in government stimulus spending. This includes $10 billion for healthcare, pipelines, schools, with $6.9 billion already earmarked. Residential construction is expected to remain flat into 2021, however.

Saskatchewan: Continuing weakness in the energy and mineral mining sectors are slowing recovery, but booming agri-food production and exports will help the province weather the storm until recovery takes hold, according to BTY Group. A $7.5 billion capital plan for boosting the provincial economy will go toward schools, hospitals, highways and utilities. Some $377 million is allocated for transportation infrastructure, primarily highway expansion and improvement.

Manitoba: Manitoba – expected to experience the least economic impact from COVID-19 – will still see construction declines across the board despite new government infrastructure spending, according to the BTY forecast. Manitoba is ramping up spending through its $500 million Manitoba Restart Program, which will build on already-planned infrastructure investments of $3 billion over the next two years. Another $150 million has been added for highway improvement projects under the Restart Program, with more funding anticipated.

 

© Copyright 2020 Western Investor

ousing Market Snapshot for Novermber 2020

BCREA
BCREA

5 Housing Market Trends to Watch for In Canada in 2021

Lauren Haw
other

 It goes without saying that 2020 was an unprecedented year, and that the ripple effect on the housing market was swift and notable. Across the country, home buyers, sellers, and renters re-evaluated their housing priorities as they navigated the COVID-19 pandemic, and many local housing markets saw several months of record-breaking sales following a spring of record-breaking declines. 

As we look forward to 2021, here are 5 housing market trends that the Zoocasa team has their eye on going into the new year. 

1. 18-Hour Cities Across Canada Will Continue to Drive Housing Demand

A common mantra you hear in real estate is: location is everything. One of the major implications of the pandemic was that it pushed home buyers to reconsider the scope of how location factored into their home purchase. 

With remote-working options becoming commonplace across the country – and some companies making them permanent – a growing group of home buyers in dense, major cities like Toronto began prioritizing square footage and green space, where they may have previously put a premium on workplace proximity. 

Not only did this result in skyrocketing demand for single-family homes in general, it also spurred many buyers to expand the boundaries of their home search far beyond city-limits. Many looked to 18-hour cities, often defined as “mid-size cities with attractive amenities, higher-than-average population growth, and a lower cost of living and cost of doing business than the biggest urban areas” to find better value.  

For example, in Ottawa, home prices rose 19% year-over-year in November, and competition remained fierce among prospective buyers. “With huge buying demand being fueled by out-of-town buyers transitioning to the Ottawa market, we can expect prices to be driven up in the new year,” said Jonathan Amodeo, Broker at Zoocasa in Ottawa. 

Generally speaking, with increased flexibility to live and work anywhere, we can expect home buyers to continue to look further for affordable, spacious, single-family housing, which in turn is expected to drive demand within these cities and consequently put upward pressure on home prices as has been the trend in 2020. 

2. ‘Typical’ Seasonal Real Estate Cycles Will Return And Buyers WIll Face Strong Competition

As most of the country came to a stand-still in March following stay-at-home orders, the economic and healthcare repercussions of the pandemic also brought the spring housing market to a halt; with record-breaking declines in prices and sales.

In response, the real estate sector as a whole pivoted to a virtual-first model, and as conditions improved, real estate boards and associations across the country implemented stringent safety protocols to prioritize the safety of the community at-large. As healthcare conditions eased over the summertime, pent-up demand, and limited inventory resulted in what many described as a “delayed spring market” effect, which in turn led to the record breaking sales experienced throughout the rest of the year. 

Based on today’s expectations of an approved COVID-19 vaccine being rolled out in the coming weeks and months, plus an entire real estate industry that now has experience safely working within the framework of COVID-19 as we know it, buyers and sellers can expect for more traditional real estate cycles to reemerge in 2021 – with the market being at its busiest in the spring and the fall. 

In fact, a recent Zoocasa report found that housing competition strongly favoured sellers in every single one of 25 major Canadian housing markets; with some of the most competitive conditions existing outside of Canada’s largest housing markets of Toronto and Vancouver – in Canada’s mid-sized cities. We can expect this trend to continue, as more Canadians who are seeking out more square footage and green space are willing to look further for housing.

3. Condo-Dense Markets Could See An Uptick in Rental Demand 

Widespread closures across workplaces, universities, and the Canadian border to tourism and immigration alike resulted in rental vacancies rising to 2.8% in condo-dense markets like Toronto this past October (from just 0.7% the year prior), and at the highest levels for the first time in over a decade. Low demand spurred an increase in new listings and a consequent drop in rental prices, particularly across the city centre, and in areas popular for short-term rentals. 

If the border opens up, and life begins to trend closer to what it was like pre-pandemic as a result of the vaccine, we can expect demand for rentals to grow again in city centres, particularly in the latter half of the year. For now, “if a renter is looking to get into a beautiful, trendy downtown condo at a prime location, now is a great time to lock it in,” said Andrew Kim, a Zoocasa agent in Toronto. 

4. Mortgage Rates Will Remain Affordable 

In response to the pandemic, the Bank of Canada kept the overnight lending rate at it’s “effective lower bound” of 0.25% for much of the year, with plans to maintain this rate until “economic slack” from the pandemic is absorbed, which is likely to be until at least 2023. Mortgage rates in turn, remain at an all-time low, with fixed mortgage rates hovering near the 1% mark.  

Based on the Bank’s guidance, we can expect the overnight lending rate to remain steady for much of 2021 as the economy reacts to short term spikes in COVID-19 cases, and recovers over the long term as the vaccine is rolled out. 

As far as mortgage rates go, there is potential for a slight increase in fixed rates as the bond market recovers in response to vaccine news and rollout. This in turn could impact the rate at which real estate prices rise toward the latter half of the year. 

5. The Housing Market in the Prairies Could Get A Boost

The Prairies have been hard-hit by the coupling effect of the pandemic plus the ongoing impact of fluctuations in the energy market on jobs and consumer debt and spending. That being said, housing competition remains fierce in the region, with all major areas in the region experiencing strong seller’s market conditions this fall, e.g. Winnipeg (SNLR of 88%), Saskatoon (SNLR of 82%), Calgary (SNLR of 87%) and Edmonton (SNLR of 76%). Generally speaking, when the SNLR or sales-to-new-listings ratio is over 60%, competition conditions favour sellers over buyers because demand outpaces available supply. 

With average home prices under the $500,000 mark across the Prairie region’s largest cities, if the world starts turning again and the economy and immigration into the region begins to recover in response to the vaccine, we can expect that the housing market in the Prairies may start to bounce back later in the year. 

 

 

© 2015 – 2020 Zoocasa Realty Inc., Brokerage

Housing market will continue to defy gravity: Central 1

Frank O’Brien
Western Investor

 Vancouver-based Central 1 Credit Union is among those forecasting that the “exceptionally strong” 2020 housing market in B.C. will continue to surge, with average prices rising 5.6 per cent in 2021 and a further 4 per cent in 2022.

The outlook is in contrast to the Royal Bank, which is calling for an 8 per cent decline in Canadian home prices next year; and both Canada Mortgage and Housing Corp.(CMHC) and Moody’s, which are predicting up to double-digit drops in prices.

Real estate brokerage Royal LePage, however, contends the current strong housing sales and rising prices will continue into 2021, led by Metro Vancouver.

In a release December 15, Royal LePage said the average price of a home in Canada will increase 5.5 per cent year-over-year to $746,100 in 2021.

Phil Soper, Royal LePage president and CEO, said, “With policy makers all but promising record low interest rates to continue, the upward pressure on home prices will continue.”

Royal LePage forecasts that Vancouver will see the second-largest increase in average home prices in 2021, increasing by 9 per cent to $1.26 million, when compared to this year.

Central 1 Deputy Chief Economist, Bryan Yu in Central 1’s latest B.C. Housing Outlook: 2020-2022, released December 21, is also quite bullish on B.C.’s housing market.

“The rebound in housing demand from pandemic-induced lows in the spring has been spectacular,” said Yu.

He noted that average home prices in B.C. were up 13 per cent year-over-year in October, with the strongest gains recorded in the Interior and Island markets due to increased demand for recreational properties

“The median price of a home in B.C. is forecast to rise by 9.3 per cent (to $585,000) this year, with a further 5.6 per cent increase (to $615,000) expected in 2021, followed by a 4 per cent increase (to $640,000) in 2022,” Yu forecasts. “ Annual resale transactions are forecast to see a 20 per cent increase this year, reaching 85,080 units, followed by a further rise of 12 per cent in 2021 to 95,200 units.”

Extremely low mortgage rates are a key catalyst for surging home sales, the Central 1 outlook confirmed.

“ Elevated liquidity at financial institutions will likely mean aggressive mortgage pricing through the spring to compete for market share, driving rates even lower and maintaining rock bottom rates until mid-2021,” Yu said.

HSBC drew headlines recently with a 0.99 per cent five-year variable mortgage rate, the lowest in Canadian history, and it is not uncommon for mortgages to be offered at sub-2 per cent.

Housing demand will also lead to a rebound in B.C. housing starts, which have dropped 21 per cent this year, compared to a year earlier, which Yu said can be traced to the pandemic, and the foreign home buyer tax.

“Total housing starts are forecast to rise 6.5 per cent in 2021 to 37,700 units, increasing by a further 4.5 per cent in 2022 to 39,400 units, “ he now predicts.

Some are not so confident in B.C.’s housing outlook.

“There are zero fundamentals supporting the rise in the housing market, other than the Bank of Canada’s printing press and people’s fears of a currency continuing to lose purchasing power,” said Vancouver realtor and analyst Steve Saretky.

Citing “tremendous risks” from the COVID-19 pandemic, Canada Mortgage and Housing Corp. said it stands by its forecast, first issued in May, that average Canadian home prices will fall between 9 per cent and 18 per cent from pre-pandemic levels before beginning to recover in the first half of 2021.
In October, CMHC chief economist Bob Dugan reiterated that forecast in a call with journalists, although he cautioned that it’s difficult to predict the “peaks and troughs.”

Royal Bank noted that Vancouver has the worst affordability rate in Canada, with 78 per cent of the average household income required to afford the payments on a typical home. The RBC “best case scenario” is for home prices to flatline in 2021.

 

© Copyright 2020 Western Investor

B.C. housing market to remain vibrant through the new year: report

Brian Yu
The Vancouver Sun

 A company that supports hundreds of credit unions across Canada predicts British Columbia’s housing market will remain healthy through 2021 as the province moves out of its COVID-19 slump. Photo by Ashley Fraser/Postmedia News files

A company that supports hundreds of credit unions across Canada predicts British Columbia’s housing market will remain healthy through 2021 as the province moves out of its COVID-19 slump.

A report from Central 1, the organization that handles financial services, digital banking and other resources for more than 250 credit unions, says B.C. has seen a “spectacular” rebound in housing demand since pandemic-induced lows in the spring.

The report says affordability remains a focus, as median home prices are up nine per cent this year to $585,000 and are forecast to climb a further six per cent to $618,000 in 2021.

It says the number of homes sold in B.C. leaped 20 per cent this year, overcoming the pandemic downturn, and up to 95,000 properties could change hands next year, nudging market highs set in 2017.

It credits the surge to “unique characteristics” of pandemic economics, ongoing low interest rates and higher-paid workers remaining relatively unscathed from the worst of the COVID-19 contractions.

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The report also forecasts a firmer rental market through 2022 as economic conditions normalize, border restrictions ease and post-secondary institutions reopen.

But it says rents shouldn’t budge much over the coming year, while a provincially imposed rent freeze is in effect.

Brian Yu, Central 1 deputy chief economist, authored the report and calls B.C.’s ongoing pandemic recovery a “mix of short-term challenges and future optimism.”

“Economic growth is forecast to pick up steam in the second quarter of 2021 onwards as the vaccine drives higher investment spending and consumer spending is unleashed when social and travel restrictions are eased,” Yu writes.

Some job loss will continue in B.C.’s “fragile sectors,” Yu says.

Even though employment remains 1.5 per cent lower than it did in February, he says the province is outperforming most others and sectors such as retail spending, manufacturing, and exports are “largely recovered.”

 

© 2020 Vancouver Sun 

Risk of catastrophic events linked to rising condo insurance costs

Camille Bains
The Province

A Crown corporation that regulates British Columbia’s private-sector insurance companies says an average 40 per cent increase in condo insurance premiums resulted from various factors including risks that insurers face from earthquakes, wildfires and flooding.

The B.C. Financial Services Authority said in a report Friday that risks related to catastrophic events, some involving climate change, have put additional pressure on insurance companies’ profitability, impacting premiums and deductibles in parts of Canada and globally.

However, it said in a final report the issues involved are complex and there are no simple solutions, and consumers should not expect shortor medium-term relief from further price increases.

Frank Chong, the corporation’s vice-president of regulations, said Alberta’s condo insurance market has also been heavily affected.

“The No. 1 factor that the (B.C. Financial Services Authority) heard that needs to be addressed to reduce premiums is the claims costs must be lowered,” Chong said.

The increased concentration of risk among too few companies insuring properties in B.C. means they face a higher potential loss from catastrophic events, he said.

While the report does not contain recommendations on how the B.C. government should address issues that are impacting housing affordability, provincial legislation introduced earlier this year will end a practice called best terms pricing as of Jan. 1.

That will no longer mean the final insurance premium paid by owners is usually based on the highest bid, even if most quotes were lower.

Chong said the regulator is in discussions with the Ministry of Housing on some actions that could be taken.

For example, the formation of a private-sector B.C. insurance company may help a global insurer more efficiently enter the insurance market, he said.

“Instead of following the normal two-step process global insurers use to enter the Canadian market, first becoming authorized federally and then provincially, home insurers could enter B.C.’s strata insurance market faster by forming a B.C. private company,” Chong said.

Hybrid public-private insurance models could also be considered for higher-risk properties and are often used to provide coverage the private sector alone cannot take on, such as risk of earthquakes, he said.

Tony Gioventu, executive director of the Condominium Home Owners Association of B.C., said significant legislative changes will have to be made to benefit consumers dealing with an independent, profit-driven insurance industry taking on billions of dollars in risk. However, an overly regulated market may have insurers pulling out altogether, he said.

 

© 2020 The Province 

No easy solutions to complex problem of high condo insurance premiums: B.C. report

Camille Bains
The Vancouver Sun

The B.C. Financial Services Authority says risks related to catastrophic events, some involving climate change, have put additional pressure on insurance companies’ profitability, impacting premiums and deductibles in parts of Canada and globally.

A Crown corporation that regulates British Columbia’s private-sector insurance companies says an average 40 per cent increase in condo insurance premiums resulted from various factors including risks that insurers face from earthquakes and flooding. Night view of legislature in Victoria. Photo by JonghyunKim /PNG

A Crown corporation that regulates British Columbia’s private-sector insurance companies says an average 40 per cent increase in condo insurance premiums resulted from various factors including risks that insurers face from earthquakes, wildfires and flooding.

The B.C. Financial Services Authority said in a report Friday that risks related to catastrophic events, some involving climate change, have put additional pressure on insurance companies’ profitability, impacting premiums and deductibles in parts of Canada and globally.

However, it said in a final report that the issues involved are complex and there are no simple solutions, so consumers should not expect short- or medium-term relief from further price increases.

Frank Chong, the corporation’s vice-president of regulations, said Alberta’s condo insurance market has also been heavily affected.

“The No. 1 factor that the (B.C. Financial Services Authority) heard that needs to be addressed to reduce premiums is the claims costs must be lowered,” Chong said.

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The increased concentration of risk among too few companies insuring properties in B.C. means they face a higher potential loss from catastrophic events, he said.

While the report does not contain recommendations on how the B.C. government should address issues that are impacting housing affordability, provincial legislation introduced earlier this year will end a practice called best terms pricing as of Jan. 1. That will no longer mean the final insurance premium paid by owners is usually based on the highest bid, even if most quotes were lower.

Chong said the regulator is in discussions with the Ministry of Housing on some actions that could be taken.

For example, the formation of a private-sector B.C. insurance company may help a global insurer more efficiently enter the insurance market, he said.

“Instead of following the normal two-step process global insurers use to enter the Canadian market, first becoming authorized federally and then provincially, home insurers could enter B.C.’s strata insurance market faster by forming a B.C. private company,” Chong said.

Hybrid public-private insurance models could also be considered for higher-risk properties and are often used to provide coverage the private sector alone cannot take on, such as risk of earthquakes, he said.

Tony Gioventu, executive director of the Condominium Home Owners Association of B.C., said significant legislative changes will have to be made to benefit consumers dealing with an independent, profit-driven insurance industry taking on billions of dollars in risk.

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However, an overly regulated market may have insurers pulling out altogether, he said.

Complexes, called strata housing in B.C., of fewer than 25 units have seen increases in premiums of 10 to 15 per cent because of a lower number of claims, Gioventu said, but larger properties were much worse off.

“Buildings that are over 100 units, which are going to be all of our essential city buildings, most of them saw increases of anywhere from 100 to 400 per cent,” he said.

“Many of these strata corporations are now going into their reserve funds to try and pay for their insurance this year because it’s either that or 30 to 40 per cent increases in condo fees.”

Stratas typically put 10 to 18 per cent of annual budgets into reserve funds for long-term planning, but that is no longer possible for many of them, Gioventu said.

“This year, it’s looking like zero for a lot of the buildings because they’re trying to balance a manageable increase in condo fees versus how they’re going to pay their insurance.”

 

© 2020 Vancouver Sun

Big urban waterfront opportunity for City

Lance Berelowitz
The Vancouver Sun

 Lance Berelowitz is an urban planner, writer on urban issues, and award-winning author of Dream City: Vancouver and the Global Imagination. He is the principal of Urban Forum Associates.

 

LANCE BERELOWITZ

The 555 Cordova site downtown has the potential to be a true urban square, says Lance Berelowitz.

When we look back at 2020 and what we all did to get ourselves, our loved ones, and our communities through COVID-19, we can be proud to say we rallied together to show our gratitude for B.C.’S non-profits. Niki Sharma, Kennedy Stewart and Kevin Mccort

Back in 2015, the future of Vancouver’s downtown waterfront was a hot topic. The city had received a proposal for a new 26-storey office tower at 555 Cordova St. It is currently a parking lot located between the Waterfront Station building and the beginning of the nationally listed Gastown Historical District along Water Street. It also offers the city’s most impressive panoramic view over Burrard Inlet to the North Shore mountains, one of the only such open spaces remaining in Downtown Vancouver.

The site, owned by Cadillac Fairview, is also a key piece of the unresolved puzzle that is Vancouver’s downtown urban waterfront. And the company has every right to develop its lands. However, if approved, the tower proposed for this charged site would all but obliterate that view or use of the space as a future public square.

Five years ago, I argued in these pages that the proposal should be paused, while city hall convened a roundtable of all key stakeholders in the broader context of the central waterfront. After all, this is the waterfront gateway to our city and also its most important public transportation nexus, with multiple stakeholders, including Translink (the Seabus, WestCoast Express, Skytrain lines and bus routes all converge here), the Vancouver Fraser Port Authority, the railroad companies, and yes, private landowners such as Cadillac Fairview and others. The area urgently needs a new plan.

Interestingly, while the city had previously developed and adopted the 2009 Central Waterfront Hub Framework (which includes this site), it owns no land here apart from the existing street rights-ofway. So it has limited skin in the game, even as its framework recognized and eloquently described the huge opportunity to reconnect Vancouver to its waterfront and create a world-class multimodal transportation hub. So this particular project — 555 Cordova St. — is the first piece of an interlocking puzzle that will either deliver the huge potential of a dynamic, publicly accessible, and re-engaged downtown waterfront focused on the transportation hub, or seal the area’s fate forever. To say there is a lot at stake is an understatement.

After a significant outcry, the project was indeed withdrawn. In the interim, the city announced that it would undertake a Central

Waterfront District plan update and that it remained committed to realizing the vision established in the Hub Framework. Several years later, this work is still in progress with no new plan yet publicly tabled. And now the proposal for 555 Cordova St. is coming back for approval. The project went before the city’s Heritage Commission in early December, which opposed it by a vote of 8-2. It was scheduled to go to the city’s Urban Design Panel in January for review, and then to the Development Permit Board in March. However, this week the applicant apparently asked the city to delay all further steps in the approvals process, for an undetermined time period, for reasons unknown.

Just to be clear, Cadillac Fairview is not the problem. In fact it can, and should be, part of the solution, being one of the key landowners in the area. It owns not just the adjacent heritage station building, but also the Granville Square development at the foot of Granville Street to the west. The city’s hub framework envisages the current parkade structure that forms a podium to the Granville Square tower above as being partly removed and Granville Street being extended northward to Canada Place and the waterfront. This will require Cadillac Fairview’s co-operation, both with the city and other stakeholders.

That is the key word for achieving the precinct’s potential: co-operation. And to get this, there has to be a process of goodfaith negotiations, in which all key stakeholders both get something of value and give something, for the greater public good. Government, at all three levels (the feds control the port through a Crown corporation, as well as regulate the railway companies, and the B.C. government controls Translink) will need to lead this process, in order to find win-win solutions that unlock the area’s best development potential. And as I wrote five years ago, implementation cannot be achieved on the backs of private landowners solely.

Will our elected officials and senior civic management show the vision and leadership required, and will we succeed? It will take time, sophisticated negotiations and potentially complicated trade-offs, and the outcome is not guaranteed. One thing is clear though: A business-as-usual approach to processing a discrete development application for a tower at 555 Cordova is not the right approach. It should be paused until a comprehensive waterfront plan emerges from the process I propose above. There is far more in play than the design of one single building on such a charged, historically significant site. And approving it could preempt some of those possibilities.

For example, the 555 Cordova site has the potential to be a true urban square in the sense of being a public space carved out of the fabric of the city, as opposed to an open block surrounded by streets. And what a dynamic public space this could be, with animated uses framing an unbeatable view across Burrard Inlet, and public connections down to the waterfront and along the rear edge of the Gastown heritage buildings down Water Street.

However, the developers still need to realize their legitimate development interests. Just not on this site. So perhaps there could be some form of land exchange with adjacent landown

Our urban waterfront should be more than just a development site for the highest bidder.

ers, or a density transfer to another location, to compensate the landowner and preserve this site for public use. This is not without precedent in Vancouver.

Our urban waterfront should be more than just a development site for the highest bidder, although private development is part of the solution and can help pay for the public infrastructure.

So again, I urge the city to convene a roundtable and invite key stakeholders to participate in a process to shape a downtown waterfront that is commensurate with our aspirations as a sustainable “green” city that is carefully planned and balances legitimate private interests with the greater public good. Many other great waterfront cities have done this successfully in recent years — think Sydney’s Circular Quay, Barcelona’s Vell Port, San Francisco’s Embarcadero, or Cape Town’s V&A Waterfront, to cite just a few examples. It is not too late for Vancouver to do the same.

 

© 2020 Vancouver Sun

Consumer spending and real estate boost B.C.’s financial outlook

Rob Shaw
The Vancouver Sun

 VICTORIA — British Columbians are spending significantly more money on things like food, electronics and real estate than they did before COVID-19 started, one of many hopeful signals the province’s finance minister cited Thursday as evidence the worst of the pandemic may has passed.

“While there’s still a long road ahead, this update offers hopeful signs for all of us,” Finance Minister Selina Robinson said as she delivered an economic update.

“The improvements are especially clear in areas like employment, retail sales and housing activity.”

Government saw revenues increase $1.4 billion this fall, due mainly to growth in income tax and real estate. But it also spent $2.2 billion in pandemic aid programs. The result is an $850 million increase to the provincial deficit forecast, to $13.6 billion, for the current fiscal year ending March 31, 2021.

The next full B.C. budget will be tabled April 20, said Robinson. That’s an almost two-month delay from the regular February date.

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The housing market has proven particularly resilient, posting sales in November that reached levels seen during the real estate spike of 2016, as well as a record-high average provincial home sale price of $806,356.

The property transfer tax, which lets government earn a slice of revenue on every home sale, jumped $479 million since the summer and is now on track to earn the treasury $1.75 billion this year — almost $200 million more than government forecast in February before the pandemic began.

The booming real estate sector helped underpin better-than-expected financial results for Robinson on Thursday, but also undermined her government’s attempts to reign in housing prices and improve affordability.

“That’s always the tension,” said Robinson, a former housing minister. “Housing starts and housing sales continue to be robust. People want to be here. And I can’t blame them. It’s a beautiful place, British Columbia.”

The booming real estate sector during the crisis is part of the “unusual world of pandemic economics,” said Brendon Ogmundson, chief economist for the B.C. Real Estate Association.

“We’re in this historic recession and global pandemic and yet home sales are on track to finish the year up close to 20 per cent and home prices up about 10 per cent,” he said. “So it’s pretty incredible.”

Part of it is pent-up demand from buyers who waited during the popular spring market when the virus was at its worst, combined with lower supply from sellers who still don’t want people physically viewing their properties, said Ogmundson.

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Record-low interest rates, quick pandemic aid to households by the federal and provincial governments, and growth in employment for higher-income earners have driven demand for detached homes on Vancouver Island, the interior and Fraser Valley by people who want space to work at home with backyards for socially-distanced entertaining, he said. The condo market, meanwhile, has not grown as quickly.

The province is currently on track for as many as 92,000 home sales this year, which is higher than the provincial average of 86,000 but lower than the record 112,000 units, said Ogmundson.

The B.C. government is projecting a 6.2 per cent drop to the economy in 2020, and three per cent growth in 2021 as part of a soft recovery. That’s a conservative outlook and the province will likely do better, said Jock Finlayson, executive vice-president of the Business Council of B.C.

Part of the spending growth that is boosting B.C.’s budget is the $15 billion in aid that Ottawa has spent in B.C., including the $2,000 monthly emergency benefit called CERB.

“There was a lot of extra cash shovelled into the province, much of which went to people who weren’t even impacted by the pandemic,” said Finlayson. “So that bolstered savings rates and has given a lot of households more spending capability than before the pandemic.”

That’s registering on the provincial books when combined with middle-to-upper-earning households that have saved money by not going on vacation and eating out less, he said.

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“A lot of people are finding themselves relatively flush with cash in 2020,” said Finlayson. “It’s one of the ironies in this COVID recession period. That has shown up in a rebound in retail sales and relatively high transactions in housing.”

Opposition Liberal leader Shirley Bond said the economy is recovering partly because the Liberals left the province in stable financial shape.

“I’m not prepared to give credit for the government when we stop and look at what happened this session,” she said. “We have restaurants hanging on by a thread. We have the tourism sector that’s been decimated. We have cuts to programs to support persons with disabilities. All those things make a difference.”

B.C. does deserve some credit for its policy work, argued Marc Lee, senior economist at the Canadian Centre for Policy Alternatives.

“A lot of this is government policy working,” he said. “Between the federal contributions and the provincial ones, financed by deficit, the support is something like 17 per cent or 18 per cent of GDP (gross domestic product). That’s underpinning a lot. And money is really cheap right now.”

Not all the financial news in B.C.’s fiscal update was positive.

Gambling revenue has collapsed by almost $1 billion from pre-pandemic levels, as the B.C. Lottery Corporation grapples with casino and gaming centre closures.

The Insurance Corp. of B.C. posted a $324 million improvement on its finances, and is now sitting at a net income of $410 million, mainly due to fewer accidents and lower claims costs caused by fewer people driving during travel restrictions. ICBC and government have been under pressure to refund those savings to drivers in some manner.

Thursday’s fiscal update came on the last day of the legislative sitting in which the NDP government passed $2 billion in supplementary spending for COVID-19 aid programs and legislation that allows it to push the budget to late April.

 

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