Archive for February, 2021

Bank of Canada has observed excess exuberance in Canada’s housing market

Sunday, February 28th, 2021

Vancouver real estate: home across Trout Lake listed $1.7 million, sells $870,000 over asking for $2.6 million

Carlito Pablo
The Georgia Straight

The Straight has previously reported about homes selling over $500,000 on top of their listed price.

If some thought nothing is ever going to beat that, here’s a surprise.

A home in East Vancouver recently sold $872,134 over its original asking price.

The top-up alone is enough to buy a townhouse or perhaps two condos.

The two-storey home at 3285 Victoria Drive sold on February 24 after eight days on the market.

Oakwyn Realty Ltd. listed the five-bedroom, four-bath residence on February 16.

The listing price was $1,728,000.

A buyer picked up the property for $2,600,134.

The transaction was tracked by Zealty.ca, a real-estate information site owned and operated by Holywell Properties.

Holywell’s managing broker Adam Major informed the Straight about the sale of Victoria Drive.

According to Major, the deal for the home located across from Trout Lake is a “candidate for craziest individual deal”.

B.C. Assessment placed the 2021 value of the property at $1,741,000 as of July 1, 2020.

There may be buyers out there who have a fear of missing out as the market continues to sizzle.

They may be tempted to enter into bidding wars.

Major’s advice: don’t.

“For buyers, I would recommend caution,” he said.

The market may have become too hot that the government could decide to do something about it.

“There is a risk that the federal government steps in to cool the housing market,” Major said.

Bank of Canada governor Tiff Macklem has observed “excess exuberance” in the country’s housing market.

“What we get worried about is when we start to see extrapolated expectations, when we start to see people expecting the kind of unsustainable price increases we’ve seen recently go on indefinitely,” Macklem said on February 24 at a meeting with chambers of commerce in Edmonton and Calgary.

The central bank dropped its interest-setting rate to 0.25 percent on March 27, 2020 to ease the impact of the COVID-19 pandemic on the economic.

The bank has maintained the rate, which is the lowest, and indicated that it will stay at that level until 2023.

“We are starting to see some early signs of excess exuberance, but we’re a long way from where we were in 2016-2017 when things were really hot,” bank governor Macklem said on February 24.

Holywell’s Major noted that the central may be “only six months late” in issuing a “warning about the housing market overheating”.

“But better late than never.  At some point, the rules could change and it could happen overnight,” Major said.

Major cited the case of New Zealand.

In April 2020, the Reserve Bank of New Zealand lifted lending restrictions to prop up the economy amid the COVID-19 pandemic.

The measure eased credit flow, and led to strong sales in the country’s housing market, with price increases setting new records.

Moving to cool the market, New Zealand’s central bank decided to reimpose so-called loan-to-value ratio (LVR) restrictions.

Starting in March 2021, banks can allocate only 20 percent of their residential mortgage lending to owner-occupiers with a down payment of 20 percent.

Moreover, banks can lend not more than five percent to investors with a down payment of less than 30 percent. Starting on May 1, the deposit requirement for investors will increase to 40 percent. 

                                                         Back of 3285 Victoria Drive.

 

Here at home, Holywell’s Major said that the last week in February 2021 was the “busiest for weekly sales since 2019” in markets served by the Greater Vancouver, Fraser Valley, and Chilliwack real estate boards.

According to Major, 1,998 sales were reported in the combined areas of the three real estate boards.

“In the last week of February 2020, there were 1,109 sales, so we are up 82 percent over the same week last year,” he said.

Zealty.ca tracking also indicates that the last week of February 2021 was the highest since January 15, 2021.

Major also noted that the Canada Mortage and Housing Corporation has been “awfully quiet”.

He recalled that CMHC predicted at the beginning of the pandemic in 2020 that housing prices would fall 18 percent.

“The exact opposite happened,” Major said.

He speculated that an increase to down payment requirements by CMHC could be come “any day”.

So again for buyers out there, caution is the word.

“Are you sure you want to win a bidding war on a teardown in the sticks to wake up to the next morning to discover the feds changed the rules so nobody else makes the same mistake?” Major said. 

 

© 2021 VANCOUVER FREE PRESS

Jack Chow well-known Chinatown figure has died at the age of 90

Saturday, February 27th, 2021

Businessman and well-known Chinatown figure Jack Chow dies at 90

CBC Staff
CBC Radio

 Jack Chow was known for operating his business out of the historic Sam Kee building on Pender Street in Vancouver’s Chinatown. (asdf)

Jack Chow, known for his contributions to Vancouver’s Chinatown neighbourhood, has died at the age of 90.

His family confirmed his death in an obituary, writing that he passed away peacefully at Vancouver General Hospital in early February.

Chow was well-known for operating his business, Jack Chow Insurance, out of the Sam Kee building at 8 West Pender Street in Vancouver’s Chinatown — the thinnest and shallowest commercial building in the world.

He was born in Cumberland, B.C., where his family ran the Chow Lee General Store, and moved to Vancouver while he was in high school.

“In business, Jack was sharp-minded, passionate and inventive, taking him from being a successful top Chinatown Realtor to creating what may be the most recognized and unique family owned insurance brokerage in the world,” his family wrote in the obituary.

“Jack will always be loved, and his family will always be grateful to him for all his dedication to family unity and togetherness.”

Chow is survived by his wife Jean, their four children, and their seven grandchildren.

 

 ©2021 CBC/Radio-Canada

Cranbook building permit values double in the past year

Friday, February 26th, 2021

Investors are choosing Cranbrook, the Base Camp of the Kootenay’s

City Of Cranbrook
Western Investor

 Cranbrook has seen building permit values nearly double in the past year. It has 200 acres of industrial land poised for development, and housing sales are forecasted to increase a further 9.2 per cent this year after surging 17.4 per cent year-over-year in 2020. 

Yet, the average house sells for $384,000, half the average price across British Columbia.

The numbers represent an opportunity that real estate and business investors have learned to respect. Because, while many cities boast that they are “open for business,” Cranbrook put its own money on the line.

The future lies in commercial and industrial development for the city. – Photograph by City of Cranbrook

“If you want someone to invest in your community, they want to see that you are also investing in your community,” says Cranbrook Mayor Lee Pratt, a former financial advisor and automotive industry executive and now co-owner of OK Tire in the city.

The investments Cranbrook has made underlines the potential of the town of 21,000, which incidentally is backdropped by the Rocky Mountains, with some of the best skiing in North America and every imaginable outdoor activity.

In 2018, the City of Cranbrook purchased a 99-acre former forestry mill site for $3 million. It sold the land in November 2020 for $6 million to Peak Renewables, which plans extensive development.

The profit on the sale will be plowed back into future initiatives supporting jobs and tax revenues, Pratt explains.

Cranbrook offers affordable housing  and outstanding, all-season recreation. – Photograph by City of Cranbrook

In the past four years alone, Cranbrook has invested $50 million in upgrading and replacing city infrastructure. The city has also streamlined the development approval process, cutting the time it takes to get anything built in half.

Depending on re-zoning, Cranbrook can turn a real estate development application into shovels in the ground within 30 days. A 292-unit multi-family rental building, now being built, took less than eight months which included rezoning, public engagement and approval by council.

Cranbrook Mayor Lee Pratt. – Photograph by City Cranbrook

That project is part of $93 million in building permits issued by Cranbrook in 2020, which was up from $48 million a year earlier. Over five years, more than $245 million building permits have been approved.

While residential has led the permits recently, the real future lies in commercial and industrial development, according to Darren Brewer, Business Development Officer for the City of Cranbrook.

Brewer notes that development of the Peak Renewables site may lead the charge.

“Peak Renewables brings decades of success and innovation in the forestry sector to Cranbrook,” Brewer says.

Peak founder Brian Fehr is known as a pioneer in automation and artificial intelligence, particularly in the growing biomass and cross-laminated timber markets.

In November 2020, Calgary-based Kanas Corporation, an award-winning “green” developer, purchased a former big-box retail building and land on Victoria Avenue North, Cranbrook where it is planning a 44,000-square-foot industrial/commercial complex, mid-rise, mixed-use residential development with assembly warehouse.

“We are impressed with the opportunities to grow within the East Kootenays, and believe Cranbrook is a great place to begin that growth,” says Kanas President Robert Sipka.

All roads lead to Cranbrook, which  is halfway between the West Coast and Manitoba. – Photograph by City of Cranbrook

Cranbrook is a logistics hub – exactly halfway between the West Coast and Manitoba, just four hours from Calgary and 50 miles (80 km.) from the U.S.A.

An average of 500 transport trucks roll through Cranbrook every day; it is served by CP Rail, and the city owns the Canadian Rockies International Airport, with scheduled service from Air Canada, WestJet and Pacific Coastal. 

Aside from 99 acres of heavy industrial at the Peak Renewable site, the city itself holds more than 100 acres of serviced industrial land, including 52 acres at the airport. Industrial land sells from around $100K to $140K avg per acre, compared to $500,000 to more than $1 million an acre in big-city Alberta or B.C.

“Choose Cranbrook” is the city’s new message for 2021, and as the record-breaking building pace shows, it is a message already being heard loud and clear.

 

© Copyright 2020 Western Investor

Does SPACs is ready for a pre – IPO company?

Friday, February 26th, 2021

Tom Bradley: SPACs are being billed as a better way for pre-IPO companies to go public, but better for who?

Tom Bradley
other

 SPACs are mostly a U.S. phenomenon whereby high-profile investment managers, rock star executives and actual rock stars raise money based on reputation alone. Photo by Carlo Allegri/Reuters files

We’re taught at an early age to never sign a blank cheque. Today, blank-cheque companies, or what are called special purpose acquisition companies, are driving the red-hot IPO market in the U.S.

SPACs have been around for a long time but 2020 was their coming out party. They raised US$82 billion, well above the 2019 number (US$13 billion), and almost as much as conventional IPOs.

SPACs are mostly a U.S. phenomenon whereby high-profile investment managers, rock star executives and actual rock stars raise money based on reputation alone. They create a shell company with the intention of using the cash to buy a business.

Initial buyers of a SPAC receive units typically priced at $10, each of which contain one share and a fraction of a warrant which gives them the right to buy an additional share at $11.50.

After the issue is completed, the SPAC becomes a public company with its only asset being cash held in trust. When an acquisition target is found and deal proposed, shareholders have the choice of either continuing to own the shares or redeeming them for $10 plus interest.

Story continues below

SPACs are being billed as a better way for pre-IPO companies to go public, but better for who? Let’s look at how the different players make out.

Companies going public 

For private companies, merging with a SPAC can be a good route if the terms of the deal are right and there’s compatibility with the sponsor. For young, growing companies, mergers are less onerous than IPOs. Less disclosure is required, and forward-looking projections are permitted, which is not the case for IPOs. This allows companies with little or no revenue to trumpet their growth.

The other benefit for emerging companies is they get an experienced hand to guide them into the public arena. An effective sponsor can smooth the process and get the deal done.

Promoters

There’s no need to do the pros and cons here. The sponsors make obscene amounts of money. They receive 20 per cent of the outstanding shares for free (the “promote”). Their only risk is reputational. If their acquisition turns out badly, they’ll still make gobs of money, but may have a tougher time doing the next SPAC.

Hedge funds 

Historically, SPACs have been heavily supported by hedge fund managers. Today, this loyalty is being rewarded when it comes to allocating shares. Hedge funds receive the lion’s share of the initial offerings. Individual investors get little or no allocation.

The math for the initial buyers is as good as it gets in investing. The rewards far outweigh the risks, even when leverage is used (which is usually the case). The upside comes from excitement around the sponsor and/or a deal that investors like. Meanwhile, the downside is minimal. There’s no capital risk (they can get their $10 back), some time risk (if the deal cycle drags out) and mark-to-market risk (if the price dips below $10 prior to redemption). It’s the holy grail — lots of potential upside with limited downside.

The amateurs

If the economics are outstanding for sponsors and hedge funds, what about individual investors? Well, they’ve had some big wins too fuelled by the bull market, but longer term, the odds are stacked against them.

Remember, the amateurs don’t get to play until the SPAC is trading. They don’t get the warrants and often pay too much. A SPAC should trade close to its issue price prior to a deal being consummated, but as with many things in this market, prices get bid up due to excitement around the sponsor and the deal they may do.

Paying a premium for cash certainly dilutes future returns, but that’s just the start. Remember, the sponsor gets 20 per cent of the company, so from the opening bell SPAC holders only have $8 of cash backing their shares. The warrants can also cause dilution if they’re exercised.

And shareholders who hang on through the deal are further diluted when the hedge funds redeem their shares, which most do. By taking back $10 plus interest (not $8), they effectively increase the sponsor’s promote to well above 20 per cent.

In a paper published in the Harvard Law School Forum on Corporate Governance, the authors calculated that on average, the shareholders effectively have been diluted down from $10 (or the actual price paid for the shares) to $7 by the time the deal is approved.

SPACs are lucrative for sponsors and initial buyers because other investors get excited about innovative companies coming public. Unfortunately, it’s like gambling in Vegas. They may win occasionally, but the house always wins.

If you want to own a cool company that’s going public via a SPAC, it may be preferable to buy after the waves of dilution have subsided.

Tom Bradley is chair and chief investment officer at Steadyhand Investment Funds, a company that offers individual investors low-fee investment funds and clear-cut advice. He can be reached at [email protected].

 

© 2021 Financial Post

The pros and cons of purchasing the upgraded condo building compare to the newly build one

Friday, February 26th, 2021

Upgraded building infrastructure slashes maintenance fees

Neil Sharma
Canadian Real Estate Wealth

Empty nesters transitioning to vertical living often make the mistake of moving into older condominium buildings because the units are bigger and, on a dollar per square foot basis, they’re priced competitively.

“People can get 1,500 sq ft not realizing they may be buying into a potential problem now or in the future,” said Sunny Sharma, broker and co-owner of Leading Edge VIP Realty. “We shy away from older buildings, and while they usually have larger units, which tend to be attractive for people transitioning from a house, they’re gravitating to older buildings not realizing a lot of problems will come their way shortly thereafter. They can do their due diligence, and that can help identify upcoming repairs, but what if it’s a major one?”

Maintenance fees rise for reasons ranging from property taxes to a condominium’s location, but older building infrastructure is also a major contributor to escalating costs. Although that problem can be rectified, the price tag is astronomical.

“To upgrade a 200,000 sq ft building, it costs about $1 million,” said Chandra Ramadurai, co-founder of Efficiency Capital. “To save $20,000 a month you may have to invest $1 million up front to optimize the equipment, which most buildings owners don’t want to do.”

There’s no shortage of the capital required for these upgrades, but Ramadurai noted that it is usually allocated toward constructing brand new buildings rather than upgrading boilers.

“Social housing is seriously underfunded as well, so it’s more allocation of capital than availability,” he said. “It’s not that upgrades are inherently risky; the problem with efficiency is you’re saving on something compared to what you did last year, and when you can’t measure something, you don’t know how much you’re making. “Baselining is important, but it’s also not easy. There are mechanisms available but they aren’t widely used, meaning there’s little to no standardization in the industry.

“Capacity is also a problem—most managers struggle to keep up with their day-to-day activities, so targeting reductions doesn’t happen much because they’re trying to keep their heads above water.”

The way Ramadurai sees it, closing the fissure between capacity and technological availability is the missing piece of the puzzle. However, that was before the COVID-19 pandemic upended the world and redirected reserve funds towards unplanned costs.

Efficiency Capital replaces outdated building infrastructure for no or low upfront costs, subsequently receiving monthly instalment payments while retaining ownership of, and operating responsibilities for, the technology. In replacing the technology, for which Efficiency Capital provides building officers maintenance training, Ramadurai says reserve funds are no longer needed. And given that the company has already done 55 buildings, there’s clearly a need in the market.

“The building gets new equipment at a reduced cost because instead of paying $1 million, they pay $20,000 upfront and $10,000 a month, and in 10 years we give them the equipment and they get the savings,” he said. “We’re not lenders; we own and operate the equipment. We’re equity investors who don’t own the building, we own the equipment in the building.

“Because we replace the equipment, you no longer need the reserve funds, which means the $1,000 in maintenance fees goes down depending on how underfunded the building is. A condo with adequate reserves will have reductions that are even higher because they don’t need to collect these reserves for the next 10 to 15 years, so there’s a 10-20% reduction on energy costs and another 10-20% on reserves, which means 20-40% is being saved.”

In addition to benefiting condo unit owners, the entire building’s value increases too, added Ramadurai.

“Typically, cash flows are counted into value, and by reducing the cost we increase the cash flow, which means that, at the same cap rate, you end up having higher value of the building.”

 

© 2021 Canadian Estate Wealth. All Rights Reserved.

Canadians are spending more money on extravagant homes despite of crisis

Friday, February 26th, 2021

Despite pandemic, Canadians spending extravagantly on homes

Neil Sharma
Canadian Real Estate Wealth

Purchasers are spending money on more expensive homes in Canada’s biggest cities and it’s trickling down the ladder, making housing more prohibitive for the people most affected by the pandemic.

“Existing home sales have shifted towards more expensive housing types in Vancouver, Toronto, Ottawa and Montreal and away from generally less expensive apartment condominiums and attached dwelling,” said a new report from the Canada Mortgage and Housing Corporation. “These markets have also seen a shift in the distribution of sales towards higher price ranges.

“This shift likely reflects the uneven distribution of the economic impacts of the pandemic, with higher-income households able to maintain their income through adapting to work from home. In contrast, those employed in lower-paid industries were less able to adapt to pandemic conditions so that, in combination with a sharp decline in new migrants to Canada, relative demand for less expensive housing types fell.”

To be clear, demand from immigrants and lower wage earners for less expensive housing has greatly diminished, but relatively well-heeled Canadians priced out of the single-family market are climbing down the housing ladder and buying whatever they can afford. According to Robert Mogensen, a mortgage broker, their ranks are swelling.

“If they had their sights set on a single-family home, with the way pricing has gone on more modest ones, they’re being pushed down into townhouses and condominiums,” said Mogensen of The Mortgage Advantage. “I’ve had a number of clients you’d assume would have no trouble, like dentists, doctors and lawyers, who’d be looking specifically for single-family homes, not qualify. Maybe because they were getting started in their professions, but they’d have to start looking at townhomes, which are typically for middle-of-the-road income earners, and now it’s driving the price of townhomes up.”

Mogensen says the fierce competition at the higher end of the housing market—where he’s seeing multiple offers on almost everything, as well as “crazy offers with no conditions”—is trickling as far down as the condominium market.

“Buying activity for higher-end homes has picked up from where it was a year ago, and now it’s working its way right down the scale. The condo market is starting to heat up as well for exactly the same reason the townhouse market is.”

At the same time, the economic impact of the pandemic is disproportionately affecting younger Canadians and lower-income households, who are watching the cost of housing soar to new heights from the sidelines.

“Despite increased government transfers to these households, their exposure to negative employment effects meant they were less likely to purchase a home during the pandemic than other households,” said the CMHC report.

 

© 2021 Canadian Estate Wealth. All Rights Reserved.

RBC helps Canadian investors explore their investments outside the country

Friday, February 26th, 2021

Low interest rates, favourable exchange turn U.S. into hotspot

Neil Sharma
Canadian Real Estate Wealth

Savvy Canadian real estate investors have, for years now, known about real estate hotspots south of the border, and with the pandemic catalyzing interest rate cuts courtesy of both the Bank of Canada and the Federal Reserve, there’s arguably never been a better time to invest in the United States.

“Over the last two months, we’ve seen record-high requests for mortgage pre approvals from Canadians looking to buy real estate here in the U.S.,” said Alain Forget, RBC Bank’s director of business development. “A lot of Canadians are COVID- and winter-fatigued and they are getting ready to make a move, and of course the U.S. market in a state like Florida has a lot to offer.”

In fact, between March 2019 and March 2020, Canadians invested $9.5 billion in the American real estate, $4.75 billion of which was in Florida. RBC recently hosted a briefing outlook on the economy and determined that the Canadian dollar should remain at about $0.78-0.80 until mid-2021, at which time the U.S. dollar will return closer to $0.76.

“The currency exchange is one of the best at around $0.78-0.80, which is close to a 25% exchange and one of the best rates in the last three years,” said Forget. “When you factor those together, it’s another opportunity for Canadians to contemplate the U.S. market from an investment standpoint.”

The first step, however, is getting pre approved—RBC helps Canadians do it online within two or three days, and the letter is valid for 120 days

RBC helps Canadian investors plan out their investments. From helping them determine their monthly payments to coming up with a financial plan—as well as putting them in touch with experienced realtors and cross-border legal and tax experts—the bank saw a marked increase last month in interest from Canadians.

Unlike in Canada, where the Office of the Superintendent of Financial Institutions introduced a 200 basis point stress test called B-20, no such thing exists in the U.S. According to the National Association of Realtors, Canadians primarily purchase single-family homes, followed by condominiums, in the U.S. Florida, for example, is often chosen for its turnkey properties, Forget says, and it’s replete with popular investor markets, as are Arizona and California.

“The beauty of the Florida market is it offers everything at relatively affordable price points,” said Forget. “If your budget is starting at $200,000, there are a lot of inland options, and for ocean view condos you should expect to pay over $500,000.”

Florida is already a popular destination for east coast Americans who, because of COVID-19, are escaping large metropolises like New York. Forget says Canadians have expressed similar intentions.

For their part, Western Canadians have grown fond of Arizona and California, the former in particular for its affordability and robust market fundamentals. However, even for investors in Central Canada, where the metropolises offer diminishing return on investments, the United States offers densely-populated markets with strong fundamentals and no shortage of rental demand.

“Florida has a lot of different markets that still offer great returns, and even with prices rising slightly, they’re far more affordable than the GTA, Vancouver and Montreal,” said Forget. “Western, Southeast and Central Florida offer different lifestyles and buying opportunities—the latter is a hot market year-round for long- and short-term rentals. Depending on your investment objective, Florida has a lot to offer at a wide range of prices.”

 

© 2021 Canadian Estate Wealth

Metro Vancouver more than 4 million office space vacant due to COVID-19

Friday, February 26th, 2021

‘Massive’ security concerns surround vacant space

Frank O’Brien
Western Investor

— Rod Fram of Transpacific Realty Advisors: empty commercial space must be monitored, | Chung Chow

Metro Vancouver has more than four million square feet of vacant office space. Calgary has 12 million square feet of empty offices downtown alone – including entire towers – part of literally acres of offices, shopping centre and street-front retail space vacant across Western Canada since COVID-19 began.

Yet every commercial space sitting empty must be protected, preserved and ready for the post-pandemic reopening, whenever that arrives.

The first line of defence is making sure there is no water ingress and that the heating and rest of the HVAC systems keep operating, said Jim Mandeville, senior project manager, large loss, at Toronto-based FirstOnSite Restoration, which has offices across western Canada.

“Businesses are faced with a unique challenge this winter: hibernating commercial facilities left vacant and unattended,” Mandevillle said. “This is a problem business and property managers have never faced on this scale before.”

Due to COVID-19, many businesses are shuttered and workers are under stay-at-home orders, which leaves commercial space vulnerable.

“There is a critical need to make sure exterior pipes are drained and winterized to avoid frozen pipes, monitor plumbing issues, check insulation, inspect roof spaces and clear debris,” Mandeville noted. He added that this, ideally, means that someone trained in mechanical systems takes a regular tour of vacant premises to spot a problem before it results in expensive damage.

For instance, a water leak that could impact all space below it. A single broken window in a mixed-use development could affect the building’s entire HVAC system.

Break-ins, vandalism

But Mandeville added there is another danger for owners and tenants who have been forced to leave commercial space empty.

“Security is a huge concern right across the country,” he said, noting that break-ins, squatters, vandalism and graffiti have all increased during the pandemic.

Vancouver Police Department data shows 966 break-ins were reported in the city’s central business district in 2020, up 21 per cent from 2019.  Across the city, business burglaries hit a 10-year high of 2,789 last year. 

Mark Forward, vice-president, property management division, for Paladin Security, Vancouver’s largest security agency, said there was a sharp spike in downtown break-ins at the start of the pandemic, including thefts from shuttered retail outlets.

Forward said many businesses have since been “hardening the premises” with locks, hoarding, improved lighting, alarms, surveillance cameras and stepped-up security patrols. This, along with colder weather, has reduced break-ins, though vandalism and squatters remains a concern.

Forward said many property owners use remote monitoring, such as closed-circuit surveillance cameras, which he said can also be used to detect fires or flooding.

Rod Fram, president of Burnaby, B.C.-based Transpacific Realty Advisors, a property management firm, said he prefers “boots on the ground” security to keep vacant space safe. Fram, whose company primarily manages suburban properties, said security is not just a downtown problem.

“Even if you have a half-full building, you have vagrants showing up, sleeping in the entrance ways, discarding needles, dumping stuff on the property. Security is a massive problem.”

Fram said a recent tour of 30 commercial sites in the Fraser Valley, a mix of office and industrial properties, found most were operating with a skeleton staff. “Pretty well every single building had the front doors locked and you had to be buzzed in.” Other sites were completely devoid of people.

But it is vital to give the impression that a site is being monitored, Fram warned.

“Once people think a building isn’t being watched is when bad things happen,” he said.

He advises property owners to increase the number of visible, random foot patrols. Some retailers with valuable inventory, such as drugs or high-end fashions, have barred windows and use barriers to stop thieves from crashing vehicles through windows. One of his clients, a jeweller, has installed smoke machines that flood the space with an impenetrable fog to deter thieves.

Fram added that any property owner leaving space vacant must notify their insurance company and provide evidence that the property is being protected. “You can actually void your property insurance if you don’t take the necessary steps to secure it while it is vacant,” he said.

 

© Copyright 2020 Western Investor 

Whats the effect of the five year fixed mortgage rates to Canada’s economy?

Thursday, February 25th, 2021

Are the days of low interest rates coming to an end for Canadian homebuyers?

Ephraim Vecina
Mortgage Broker News

 If the opinions of various observers are to be believed, five-year fixed mortgage rates will likely be on their way up if inflation pressures south of the border intensify.

Writing for Move Smartly, independent mortgage planner David Larock said that the Canadian five-year bond yield’s increase from around 0.5% to 0.65% last week “has lowered gross lending spreads (and, by association, lender profit margins) to well below their normal levels.”

So far, the only thing that is preventing across-the-board rate increases is the feverish competition among Canadian lenders.

“No-one wants to be the first to move higher,” Larock said. “Regardless, the dam will break very soon.”

The combination of steady vaccinations, a recently announced US$1.9-trillion pandemic relief package, and a resurgent economy has made the possibility of US inflation rising even higher “virtually guaranteed”.

“When that happens, more normal prices will take their place, causing the [consumer price index] to rise higher still (and the same phenomenon will occur in Canada),” Larock warned, adding that while both the US Federal Reserve and the Bank of Canada have repeatedly assured that they will not take these indicators as signals that inflationary pressures will intensify, “good luck convincing investors who are already primed for that outcome.”

James Laird, co-founder of Ratehub.ca and president of CanWise Financial, echoed these observations.

“The 5-year fixed rate in Canada reached its record low this past summer and has remained there since. This is about to change with lenders across the country announcing fixed-rate increases of between 0.1% and 0.2%. Any lender who has not yet announced changes to their fixed rates is expected to do so by the end of this week,” Laird said.

Laird added that should Canadian inflation ride the wave of optimism brought about by the federal government’s vaccine roll-out, “Canadians should expect fixed rates to continue on their upward trend.”

However, Larock isn’t convinced that the upward trend in bond yields will be permanent, citing “the repeated short-term run-ups over the last 10+ years as the yield dropped from 4.11% to 0.65%.”

More pressing dynamics are currently in play.

“Both the US and Canadian economies have seen their employment momentum stall out and that, not inflation, tops the Fed’s and BoC’s worry lists,” Larock said. “The US and Canadian economic output gaps (which measure the gaps between their actual outputs and their maximum potential outputs) are still the widest they have been since the depths of the Great Recession in 2008.”

Larock argued that any rise in inflationary pressures won’t materialize until those gaps narrow.

 

Copyright © 2021 Key Media

Q1 net income increase compare to previous quarter

Wednesday, February 24th, 2021

RBC reveals Q1 financial results

Ephraim Vecina
Mortgage Broker News

 Sustained strength is the running theme in Royal Bank of Canada’s (RBC’s) fiscal first quarter results, which show that net income grew by 10% annually to $3.847 billion.

The quarter ending January 31 saw net income increase by $601 million over the previous quarter, boosted by strong performances in the bank’s personal and commercial banking, capital markets, wealth management, and investor and treasury services.

“Results across our businesses benefited from strong volume growth, increased client activity and constructive markets, partially offset by the impact of low interest rates and higher expenses largely due to variable and stock-based compensation commensurate with strong results,” RBC announced.

The bank’s capital position remained “robust”, with a CET1 ratio of 12.5% “supporting strong volume growth and $1.5 billion in common share dividends paid.” RBC also boasted of a strong average Liquidity Coverage Ratio (LCR) of 141%.

RBC’s fiscal Q1 readings also exhibited lower provisions for credit losses, “largely resulting from releases of provisions on performing loans,” the bank said. “Lower provisions on impaired loans also contributed to the decrease.”

Dave McKay, president and CEO of RBC, said that the bank’s enviable momentum persisted amid the uncertain macroeconomic backdrop brought about by the COVID-19 pandemic.

“This is a reflection of the resiliency of our diversified business model, prudent approach to risk management, significant technology investments, and our colleagues’ dedication to our clients and communities,” McKay said.

 

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