Owners of empty homes will pay more in Vancouver

Kendra Mangione
other

It will soon cost more to be the owner of an empty residential property in Vancouver, as a motion for another tax hike is approved.

The city’s Empty Homes Tax – charged to owners who don’t live in or rent out their properties – is going up to five per cent next year.

Previously these owners had to pay an extra three per cent in taxes as part of the measure meant to encourage the long-term rental of empty homes.

The measure, put in place years ago, was in response to a near-zero vacancy rate in Vancouver that led to sky-high rents for the limited housing supply. Since imposed, the available supply has improved, though landlords continue to ask for more rent each year.

The move was also to discourage homeowners from using their properties solely for the arguably more profitable short-term rental system, through sites like Airbnb. Those who do want to rent on those sites can still do so, but need a business licence and can only rent their space if it’s the owner’s principal residence, or a secondary suite in which the operator lives most of the time.

The motion to increase the tax again was put forward by Mayor Kennedy Stewart, and included too that the number of audits be more than doubled – to 20,000 for 2023, up from 9,000.

The approved proposal also directed city staff to report back to council early next year on how the tax can be used to reduce the “large number of short-term rental properties,” how exemptions can be altered to ensure fairness, and how it will be impacted by recently approved federal measures.

Additionally, the mayor asked staff to look at how a doubled rate of 10 per cent might impact the city’s rental market. As for whether that tax hike is actually a possibility, 2022 is a municipal election year, so it may depend as much on who is leading the city after the vote as the results of the research by staffers.

 

© 2022  All rights reserved.

Vancouver empty homes tax to jump to 5% starting in 2023

Michelle McNally
Livabl

 Vancouver homes that are sitting unoccupied will face higher taxes next year.

This week, Vancouver’s City Council unanimously approved Mayor Kennedy Stewart’s motion to hike the city’s Empty Homes Tax (EHT) from three to five per cent starting in 2023. The motion also includes doubling the number of audits under the program from 9,000 to 20,000 for the 2023 vacancy tax reference year.

Since its introduction in 2017, Vancouver’s EHT has been hiked more than once. The EHT was first implemented as a one per cent tax, and was later increased to 1.25 per cent in 2019 and boosted to three per cent in 2021.

In a tweet posted on Wednesday evening, Mayor Stewart called the EHT increase a “big blow to housing speculators.”

Vancouver’s EHT — otherwise known as the Vacancy Tax — was created for properties unoccupied for at least six months of the year. The tax is designed to encourage homeowners to put empty and under-utilized properties on the market as long-term rental homes, therefore boosting housing supply and helping the city’s low vacancy rate.

Research published by the City of Vancouver shows that the number of vacant properties decreased 26 per cent between 2017 and 2020 as a result of the EHT. Thirty-six per cent of properties declared to be vacant in 2019 were later converted to occupied homes in 2020, and $86.6 million in tax revenue has been collected to support affordable housing initiatives under the program as of November 2021.

Information from City of Vancouver staff, who performed 8,000 audits in 2019 and over 9,000 audits in 2020, report that an average of 6.4 per cent of those who were audited were found to be in non-compliance.

According to the City of Vancouver, homeowners are required to submit a declaration each year to determine if their property is subject to the EHT or not. Homes that are found to be empty are subject to the EHT, which is currently three per cent of the property’s 2021 assessed taxable value.

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Exemptions to the EHT can be made in specific circumstances, such as the death of the registered owner or major renovations. This also includes homes that are principal residences or are rented out for at least six months of the year.

Vancouver isn’t the only Canadian city to consider a vacancy tax. Peel Region in Ontario recently launched an online survey to gather public input on a potential Vacant Home Tax (VHT) program. Ottawa will implement its one per cent EHT in the 2023 taxation year, while Toronto City Council approved the implementation of its own VHT program starting in January 2022.

In Q1-2023, Vancouver City Council will review additional EHT policies, including altering EHT exemptions to improve fairness, exploring ways to reduce the large number of short-term rental properties and examining how the federal government’s anti-flipping measures may affect the EHT. Members will also consider how increasing the rate to 10 per cent might further increase rental stock.

 

© 2020 BuzzBuzzHome Corp.

3.2-acre ALR exclusion in Abbotsford sells for $6.5 million

Frontline Real Estate Services
Western Investor

Recently removed from the Agricultural Land Reserve in West Abbotsford, B.C., the land is now designated for industrial development.

Property type: Industrial land

Location: 30189 Old Yale Road, Abbotsford, B.C.

Size of property: 3.2 acres

Sale price: $6.5 million

Date of sale: February 24, 2022

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

Brokers: Todd Bohn and Braydon Hobbs

© 2022 Western Investor

GTA home prices cool from February highs heading into spring

Michelle McNally
Livabl

Homebuyers looking in the Greater Toronto Area are no stranger to high prices. Since the COVID-19 pandemic started more than two years ago, prices in Toronto alone have increased over 20 per cent.

Yet, as the market hits peak springtime, communities across the Toronto region are actually noticing that home prices are trending downward.

New data released by HouseSigma shows that GTA home prices have been cooling from their record February numbers over the past several weeks.

From February to April 19th, the median sold price of a freehold townhouse fell the most compared to other property types, decreasing 22.6 per cent from $1.24 million to $960,000.

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Median sold prices for GTA detached and semi-detached properties dropped at a similar pace from February to April, decreasing 12.1 per cent and 13.5 per cent over the near two-month period down to $1.45 million and $1.15 million, respectively. Between February and April, median sold prices for GTA condos reported the smallest decrease, falling 6.8 per cent from $740,000 to $690,000.

By community, some of the most notable price declines were noted in municipalities surrounding the City of Toronto. Located at the top of the GTA, Brock saw the median price of a detached home fall 29.25 per cent between February and April, an approximately $310,000 difference as prices dropped from $1.06 million to $750,000.

Similarly, median prices were down 20.98 per cent, 19.44 per cent and 15.9 per cent in Georgina, East Gwillimbury and King. In the GTA’s larger communities — Toronto, Mississauga and Markham — median prices dropped 9.08 per cent, 11.1 per cent and 11 per cent over the almost two-month timeline.

In all of the 25 communities HouseSigma analyzed in its report, prices grew in only one municipality. From February to April 19th, the median price of a detached house in Burlington increased from $1.56 million to $1.59 million, a 1.92 per cent jump.

While the selling price of homes have dropped, GTA properties are now spending double the amount of time on the market. When aggregated, the median number of days a Toronto home stays available for sale has increased from six days in February to 12 days in April.

Hungry home buyers might also be happy to have more selection now compared to a couple of months ago. The number of properties available for sale on the market rose from 6,886 homes in February to 12,120 properties in April.

In a recent RBC Economics report, Robert Hogue, RBC’s assistant chief economist, said that deteriorating affordability and higher interest rates would help to curve home prices, predicting that prices will peak this spring before weakening throughout the year. That said, stronger-than-expected gains made in 2022 so far will hike the annual average price for 2022 higher than predicted, up 8.1 per cent compared to 6.2 per cent. However, the 2023 annual average will likely fall 2.2 per cent instead of rising 0.8 per cent like initially predicted.

Compared to other markets, Canada’s most expensive communities — like Toronto — will feel the pain of rising rates the most.

“This will translate into larger annual price declines in 2023 in British Columbia and Ontario,” said Hogue. “By comparison, we expect activity and prices to be more resilient in Alberta, where local markets have more catching up to do following a prolonged slump before the pandemic.”

 

© 2020 BuzzBuzzHome Corp.

Poll: FHSA impact on first-time buyers’ purchases will likely be muted

Ephraim Vecina
Western Investor

Many Canadians say they will not be able to muster enough funds for the federal government’s tax-free savings program

 More than seven out of 10 Canadians (72.07%) who do not yet own a home, but want to eventually, think that the federal government’s First Home Savings Account (FHSA) will have little to no positive impact on their ability to buy their first home, according to a poll by fintech Hardbacon.

The FHSA was announced as part of Budget 2022’s commitments to improving the housing situation. Through this tax-free program, Canadians 18 to 40 years old are allowed to deposit $8,000 annually with a lifetime contribution of $40,000, helping them save for the down payment on their first home.

Of the 88.6% of respondents who said that they want to enter into homeownership, 70% want to use the FHSA. However, of the 30% who do not plan to use the FHSA, 54% said that this is because they do not understand the advantages of the program, while the other 46% said that they won’t have sufficient funds to save to contribute.

Read more: NDP leader pledges aid for first-time buyers and boost for housing supply

“The FHSA is a tax-free savings account, but it doesn’t mean that it actually makes saving for a down payment any easier, especially in hotter real estate markets. What the survey found is that the most effective source of a down payment is the Bank of Mom and Dad. Still, not everyone is that fortunate,” said Hardbacon’s Stefani Balinsky.

Nearly 83% of respondents do not expect any financial assistance from family when it comes to their first home purchase. Of this segment, 32.8% will be cutting down on their expenses so that they can put money into their FHSA in 2023, while 16.8% will reduce their RRSP contributions, 12.8% will reduce their TFSA deposit, and 9.6% will draw funds from their TFSA.

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House prices soaring amid continued low supply-high demand

Micah Guiao
other

The first quarter saw the highest gain on record since the index began

Canadian house prices saw an aggregate 25.1% year-on-year increase to $856,900 in Q1 2022, marking the highest gain on record since the index began, according to the Royal LePage House Price Survey.

By the fourth quarter, Royal LePage is forecasting that the aggregate price of a home will increase 15% compared to Q4 2021 – pointing to a mild slowing of the market in the lead-up to 2023 but still higher than original projections.

Read next: StatCan: Markets seeing sustained growth in home prices

Phil Soper, president and chief executive officer of Royal LePage, said the low supply-high demand imbalance would continue to drive up house prices in the months ahead. Even the Bank of Canada’s recent 0.5% hike won’t be enough to tame the impact of sharp price increases.

The temporary ban on foreign buyers will not provide material relief to potential homebuyers either, since it is reported the group does not make up a significant portion of homeowners in Canada.

“Entering 2022, we had anticipated a strong first half, and moderating real estate markets thereafter. Call it buyer fatigue or easing demand, these periods of uncomfortably high home price appreciation do run their course,” Soper said. “We are seeing the first signs of moderation in some regions, as more inventory is becoming available and competition eases slightly.”

Based on housing type, single-family detached homes rose 26.7% YOY to $906,100, while condominiums rose 19.7% YOY to $612,900 across the nation’s largest real estate markets. Multiple-offer scenarios for appropriately priced listings remain the norm in most communities, Soper said. This enables homeowners to sell them above the listed price.

Read more: Priced out of Ontario, which market are homebuyers turning their attention to?

“It is worth noting that most Canadians with higher loan to value mortgages have successfully passed the stringent federal requirements of the OSFI mortgage stress test – they have proven that they can manage significantly higher rate increases than we anticipate they will see,” Soper said.

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Richmond office developer eyes smaller spaces despite density bonus

Maria Rantanen
Western Investor

Pandemic has changed office demand in the Richmond market, developer claims

 Bene (No. 3 Road) Development wants to subdivide the upper floors of a proposed office tower in Richmond despite having received bonus density for large floorplates. / Submitted

Richmond wants developers to build large office spaces in its downtown, but one developer that received bonus density to do so now wants to create smaller office units in the project.

Bene (No. 3) Road Development Ltd. received 11,025 square feet of additional density for a 10-storey office and retail tower at 4700 No. 3 Road in the Aberdeen area as part of a January 2020 rezoning application. The city granted the bonus density on the condition that Bene not subdivide each floor of the planned tower into more than one strata lot.

But now Bene says market conditions require a revision to its agreement with the city.

“Due to the fact that we are facing dramatic changes in the market, we would like to emphasize that it is extremely difficult, [if] not infeasible, to market an office building under one strata title per floor,” a letter from the developer states.

It says the market is demanding smaller office units, in view of more people working from home.

Two councillors supported the developer’s proposal at the city’s April 20 planning committee meeting.

Couns. Andy Hobbs and Chak Au both spoke in favour of allowing the compromise to be approved, despite the fact it didn’t comply with a City Centre policy and city staff recommended not approving it.

Hobbs called the revised proposal a “reasonable compromise,” although he noted he’s argued in the past to stick to policy.

“But I think it’s also the role of council to make reasonable exceptions and discretionary decisions with regard to policy and that’s our role, and I think staff and council working together can achieve that,” Hobbs said about the development at No. 3 and Leslie roads, across the street from Superstore.

The original plan was to have one large office on each of the six top floors of the building. (The first four floors of the building are slated for retail use.)

A few weeks ago, the developer proposed scrapping any unit-size restrictions, but still wanted to keep the extra floor area that was granted as a bonus.

“Effectively, the applicant was requesting the ability to keep the additional density granted without having to fulfill the primary condition (i.e., creation of large floorplate leasable office space) that was secured in exchange for the increase in density,” reads the city staff report.

The planning committee didn’t approve that and last week the developer came back with a revised proposal, which would see two floors of large units and the other four floors broken up into smaller units.

One of the remaining four floors would be divided into two units. The other three floors would have offices as small as 650 square feet.

The developer also proposes giving $80,000 to the affordable housing fund.

Au said he supports the “spirit” of the large-office policy but he called the revised plan a “good compromise.” He added that no one could have predicted the changes that have happened over the past few years, ostensibly referring to the COVID-19 pandemic when many offices shut down as people worked from home.

“This kind of mix would be a good compromise in response to market changes,” Au said.

Au questioned, however, whether a proposed $80,000 contribution to the affordable housing fund was “a fair cash contribution.”

The general manager of planning, Joe Erceg, told the planning committee that Richmond shouldn’t doubt the city’s ability to attract large businesses. Most large businesses, however, are currently located in business parks outside City Centre because that’s where there are large units.

He noted the policy – to give extra density in exchange for creating large office units – was created to attract large businesses to City Centre. The report notes large offices would attract companies that are in information technology, clean tech and digital creative sectors.

“If you chop it all up before it’s built, you will not have any success attracting such businesses because you won’t have suitable premises for them,” Erceg said.

Furthermore, the most viable area for offices is City Centre, and this can be seen in its low vacancy rate of under five per cent, Erceg added.

Large offices support a “diversified economy,” city staff note in their report to city council.

Last week, the committee asked staff to provide more information on the value of the bonus before a final decision is made.

The item is back on the planning committee agenda for May 3.

 

© 2022 Western Investor

Census on Metro Vancouver housing shows shift of missing middle families continues unabated

Derrick Penner
The Vancouver Sun

Young families continue to move where more spacious housing is being built, while apartments take over as the housing type in the city core

 COVID-19 accelerated Metro Vancouver’s migration of younger families from urban centres to the suburbs, according to census figures released Wednesday, which planners say challenges all municipalities to meet family needs. Photo by Francis Georgian /PNG

COVID-19 accelerated Metro Vancouver’s migration of younger families from urban centres to the suburbs, according to census figures released Wednesday, which planners say challenges all municipalities to meet family needs.

“The missing middle is really in Surrey, with some really good heat happening over in the District of Langley,” said urban planner Andy Yan, upon his first review of the data, using the shorthand term for young, middle-class families increasingly priced out of real estate in Vancouver’s inner suburbs.

Surrey, the City of Langley, the Township of Langley and Maple Ridge are all areas where the proportion of housing being built skews toward townhouses and houses versus Vancouver, where apartments, either condo or rental, are now solidly the most dominant housing form.

In Vancouver, 62 per cent of occupied dwellings are apartments, vs. just 15 per cent that are detached homes and 23 per cent that are townhouses.

 

Compare that with Surrey, where 33 per cent of occupied dwellings are detached homes, 42 per cent townhouses and 25 per cent are apartments, and the shift is about “family sized housing,” said Yan, director of the City Program at Simon Fraser University. “The issue of adequate housing is that it’s not only about affordability, but is it adequate to the household at their particular life cycle. It’s affordability, it’s security of tenure, it’s size, then design and amenities.

“That’s what makes it harder for some municipalities than others,” Yan added, with municipalities such as Vancouver locked into its pre-existing grid, while the expanding municipalities such as Surrey have more room to build other housing types.

 

Still, demand for housing in the province still far outstrips supply, experts say, even as the latest census figures show growth in the number of homes was higher than the increase in population countrywide. Statistics Canada reported Wednesday that growth in apartments in a building with five or more storeys has far outpaced other types of dwellings across the country, though single-family homes remain the dominant form, making up about half of all dwellings.

“The trend in the pandemic that was noticeable was people that elected to live in a condo close to work downtown, suddenly working from home, migrated to the suburbs,” said realtor Ron Antalek of Re/Max Lifestyles Realty.

Now, with pandemic restrictions eased, markets have “normalized.” Antalek added there are “still many people that are working from home” joining the migration east.

 

The municipalities that have seen growth, such as Surrey and Langley, are also the ones that have available land and been “supportive of townhouse developments, kind of that missing middle soft density,” said realtor Adil Danani.

“It’s official community plans that are supportive of seeing more supply,” said Danani of Royal LePage West. “I think that’s what’s happening in Surrey, what’s happening in Langley.”

The next challenge, however, will be for municipalities experiencing growth to knit their neighbourhoods together and for cities to “up their game” in creating family friendly neighbourhoods, said urban planner Brent Toderian.

Toderian said the pandemic effectively “broke its contract” with urban citizens who had traded long commutes from more spacious homes for the convenience of walkable precincts closer to work.

 

During the pandemic “we had times where we were told to stay inside,” he said.

Now that pandemic restrictions have eased, Toderian believes the suburbs that will do better will be those that “better integrate urban living (well),” and cities that succeed “that are designed specifically for families will win.”

“That’s why cities like Surrey and Burnaby are building real downtowns. They’re building urban places that are fundamentally different,” Toderian said.

Yan added that the challenge for Vancouver is to use its existing family oriented infrastructure — parks, schools and community centres — to draw family friendly density.

“The core question and core term is family,” Yan said. “These (Vancouver) neighbourhoods really need to be centred around families.”

 

Vancouver has made headway in requirements for two- and three-bedroom units in new development, but Yan said more focus still needs to be put specifically on the family element.

“We can’t be a city (and) I don’t think we want to be a city of just studios and one-bedroom (apartments),” Yan said.

 

© 2022 Vancouver Sun

How to invest $500k in real estate

Corben Grant
Canadian Real Estate Wealth

 When it comes to real estate, the more money you have, the more options you can find for investing. For those with less money even, there are still options to take advantage of the real estate market to grow your wealth, however, it helps to have a bit more to get started with.

Let’s say you have $500,000 and are looking to invest. Be it from savings, other investments, or a large windfall like an inheritance, that’s a lot of money to work with so it’s important you make the right decisions. You could very easily spend half a million dollars faster than you realize and be broke before you know it, or, you can invest your money wisely and see it grow even further.

There are many options to invest in – the stock market, mutual funds, cryptocurrency, exchange-traded funds, and more. But real estate is one of the most popular options for investors for its unique benefits.

In this article, we will answer the question: “How should I invest $500k in real estate?” and give you some ideas of what options might be best for you.

Why real estate?

Real estate has long been considered a very wise investment. People love investing in real estate because it allows them to grow their money easily while maintaining a lot of value in the long term against market fluctuations.

Though real estate can be volatile, it is much more stable than something like the stock market. More importantly, it offers a place for people to live and work and find entertainment which is fundamental to our society that the demand for real estate is almost completely future-proof (unless the metaverse really takes off).

Large financial requirements can be the biggest barrier to investing in real estate

Why don’t more people invest in real estate? Well, they do. Every year more people are looking to add real estate to their investment strategy, especially with our current economic conditions. For those that don’t invest, there is usually a single factor that limits them – the money. 

 

Real estate is more expensive than most other assets and all those benefits can be hard to access to their fullest potential if you can’t reach the financial requirements.

The good news for you is that you have $500,000. With that amount of money, you have nearly all avenues of real estate investing open to you to try out, from the smallest of REIT investments all the way to large commercial properties.

Don’t put all your eggs in one basket

While there are many options for low-risk investments in real estate, no investment is ever guaranteed to perform. And, with so many great options in real estate, why not try out a few? With $500,000 you have some wiggle room to diversify your investment portfolio, improve your overall risk tolerance and benefit from growth in multiple different real estate segments.

For example, you could mix active and passive investing by managing a rental property and owning a stake in a real estate fund. Or, you could enter into both the commercial and residential side of real estate for each segment’s different benefits. You could buy property in multiple different cities or towns or you could simply buy two properties of the same type and double your cash flow potential.

Options for investing in real estate

Residential real estate

$500k will cover a significant amount of a down payment for a home or even allow you to purchase a home outright in many areas of the country. This could be a home for your own residence or it could be a rental property.

Personal residence vs, rental property

If you buy a home to live in, you get the obvious lifestyle benefits as well as potential equity growth that can mean a large profit down the line (and remember, primary residences are exempt from capital gains taxes.) A rental offers the same equity opportunities, but also can allow you to collect cash flow while you own. This can help offset the carrying costs and once you’ve covered your housing expenses it becomes pure profit for you.

Buy in cash or finance?

As mentioned before, you could potentially afford a residential property outright, but should you? Buying in cash is nice because it saves you the hassle of securing financing and allows you to have full ownership of your home right away. However, it also limits your options. For one, homes under $500,000 (even if you don’t account for closing costs) are becoming increasingly rare. At the same time, owning equity does not do much for you until you sell or take out a line of credit, so your money will be tied up in the home. Instead, you could choose to finance and keep some of your money for other more liquid investments or look into financing multiple rentals and have better access to continuous cash flow.

Commercial real estate

Commercial real estate is an area that takes a bit more money to get into and can be a very different type of investment to manage, but there are so many options for those with money to invest.

Commercial real estate covers many different property types, from multifamily buildings to industrial, commercial, office space, and more. Each property type will offer its own benefits for investors. For example, multifamily buildings are a lot like residential rentals, but with much larger cash flow potential. On the other hand, something like a retail or office space can offer the benefits of long-term leases (up to 10 years in some cases), which means steady and consistent income.

If you don’t want to manage your own investment property, you can even offload a lot of your properties needs to a property management company or a tenant and enjoy a much more hands-off experience.

 

Other ideas

As we mentioned earlier, your options at this price point are numerous. Here are a few more you could consider:

• Become a lender to other real estate investors
• fund a real estate development
• Purchase vacant land to build upon
• Invest in a real estate fund or crowdfund for passive growth
• Closing thoughts

Every investment comes with some risk, so it’s crucial that you understand where your money is going and what it can do for you. However, if you don’t know what your options are, you may be leaving money on the table.

I hope you now have a better idea of some of your options for investing up to $500,000 in real estate, however it doesn’t end here. For such a large sum of money, you should definitely consider speaking to an investment planner or qualified financial advisor to get the best information for your specific circumstances. Good luck with your investing!

 

 

© Canadian Real Estate Wealth

GTA housing market – Robust sales, low supply

Ephraim Vecina
other

However, signs of a generalized market slowdown are looming, observers warn

 The GTA new home market saw sustained sales strength and inventory shortfalls in March, according to the latest data from Altus Group and the Building Industry and Land Development Association.

A total of 4,115 new home sales took place in the region in March. While this was 21% lower than the extraordinary pace seen during the same month last year, it was still 12% higher than the 10-year average for March.

However, “signs of slowing are emerging, as higher interest rates alongside record prices start to impact demand,” said Edward Jegg, research manager at Altus Group.

Condo sales fell by 7% annually (down to 3,277 transactions), and single-family home sales had an even more precipitous 50% decline (down to 838 transactions).

Read more: Toronto park rezoning proposal aims to boost region’s housing supply

The region’s remaining inventory of condos registered an annual decline for the 10th straight month (down to 7,220 units), while single-family home supply plummeted by more than 50% (down to 830 units).

“Although new home sales eased in March compared to the exceptionally strong pace of the past few months, demand continued to outpace the supply of new homes, leaving the region with an inventory shortfall,” said Dave Wilkes, president and CEO of BILD. “We cannot let short-term market variations mask the root causes of the housing supply and affordability challenge in the GTA. We need to keep our eyes on the long-term solution: building more new homes.”

GTA’s condo benchmark price spiked by 17.7% year over year to reach a record high of nearly $1.253 million, while the benchmark for new single-family housing grew by 27.3% to end up at $1.838 million.

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