Vancouver housing market faces slower price growth, drop in building starts in 2022

Michelle McNally
Livabl

Vancouver’s housing market could see home prices gradually fall this year while challenges related to housing starts, labour shortages and affordability continue to linger.

The Canada Mortgage and Housing Corporation (CMHC) recently released its Housing Market Outlook report, which outlines forecasts and predictions for Canada’s national housing market and 18 of the country’s largest urban centres, including Vancouver.

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According to the report, the average home price in Vancouver is expected to keep increasing, but the pace of growth is anticipated to slow after Q1-2022 and fall below five per cent year-over-year after 2022.

Higher property prices haven’t prompted a rush in new listings from sellers, so the pace of sales is expected to drop from “an unsustainable high.” The decrease in sales will occur throughout 2022 until the total level of sales is slightly below the average for the past five years, according to CMHC.

Housing starts to drop in 2022

This year, total housing starts are predicted to fall but will rise to levels similar to the past five years in 2023.

In 2022, total housing starts will sit between 22,000 and 26,000 units, lower than 2021’s 27,485 starts. The following year, total housing starts are expected to fall between 18,900 and 30,300 homes.

As single-family detached starts continue on a downward trend as the region’s housing density increases, total starts will be dedicated towards apartments. Ground-oriented housing types will be focused on row and semi-detached product. This year, starts for single-detached units will average between 2,700 and 3,300 homes, much lower than the 19,300 to 22,700 units expected for multiple-home types in Vancouver.

For projects that already have acquired land, price growth over the last two years will give those developments “an incentive to move forward,” but labour shortages and supply chain issues will contribute to higher construction costs.

The prospect of the construction industry pushing total starts to ever-higher annual output seems unlikely,” said the CMHC report. “Absorption of new units will also be uncertain as buyers face affordability challenges.”

Rental demand in Vancouver rebounded in 2021 as students, migration and employment improved, factors that will place more pressure on rental supply, especially as homeownership costs stay high. Current construction levels and long development timelines, however, won’t provide much rental relief over the next three years to raise vacancy rates or stimulate competition among property owners to lower rental prices.

Higher interest rates may reduce buyer spending power

Financial obstacles like rising interest rates could create hurdles for Vancouver homebuyers.

Rising interest rates have historically resulted in fewer sales and slower price growth, creating a “major headwind for prospective buyers.” Monthly mortgage payments will rise while the loan amount offered from lenders will fall, dampening buyer spending power, according to CMHC.

However, trouble in national and global markets might reverse the expected increases to rates. If Vancouver homebuyers were insulated from the negative economic effects that tend to coincide with rate cuts, lower rates could stimulate the market.

“If buyers face greater financial obstacles than what we expect, market activity will slow to a greater degree,” said the report. “Historically, it takes several years for inventories and listings to rise to a point where this market sees downward pressure on prices.”

Vancouver is expected to see a growth in immigration and high-skilled, high-wage jobs, but the old challenge of attracting workers to an expensive housing market is emerging again, CMHC noted.

“Vancouver will emerge from the pandemic with a strong economy,” said Braden Batch, senior analyst of market insights. “Immigration will be a major demand driver over the next few years, but a lack of supply at all levels and tightening credit has worsened affordability.”

 

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Massive investment in BC housing supply announced

Ephraim Vecina
other

New housing complex provides more than 100 low-cost units

Federal and provincial investments of $5 million and $25 million, respectively, have been announced for a new multi-use housing building in Surrey, British Columbia.

The investment in the new six-storey Foxglove complex, situated at 9810 Foxglove Drive, also came with approximately $3.2 million in annual operating funding for the project. The building provides 66 supportive homes and 30 permanent shelter spaces for people at risk of or experiencing homelessness, along with 34 complex-care beds for vulnerable individuals requiring support.

The building will be operated by RainCity Housing and Support Society.

“Complex care clients will have access to enhanced supports on-site, including nurses, peer workers, social workers, and other health-care professionals, along with access to treatment and other specialized services,” said Canada Mortgage and Housing Corporation.

Read more: Analysis: BC housing at the mercy of inter-provincial migration

The federal funding for this project comes from the first tranche of a $75 million memorandum of understanding with the government of British Columbia. The agreement aims to help build 1,500 units of affordable housing across the province.

“The opening of this building is the next step in providing a real solution to an issue that has gone on for far too long in BC. We’re working to make sure the housing system works better for people with serious mental-health and addiction issues so they aren’t left behind in a cycle of shelters, evictions, emergency rooms and even jail cells,” said David Eby, Attorney General and Minister Responsible for Housing. “This building, and others like it opening across the province, will help people with complex challenges get the care they need, when and where they need it.”

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Ontario home selling – changes coming

The Canadian Press
other

 The Ontario government is giving property sellers the option of disclosing the details of competing offers, but not going as far as to ban blind bidding.

Minister of government and consumer services Ross Romano said in a statement that sellers will get to choose if they want to “opt for an open offer process” and share bids.

“Sellers will no longer be limited to selling their property through a closed or traditional offer system,” he said.

Blind bidding, a practice where buyers bid for a home without knowing the size of competing offers, is pointed to by some as one of the drivers behind inflated home price gains.

The move by the provincial government is part of a bigger reform to the Trust in Real Estate Services Act.

The changes, which also includes a new code of ethics for real estate agents, more clarity for buyers during the home buying process and greater powers for the Real Estate Council of Ontario to go after bad actors, are set to take effect on April 1, 2023.

The Ontario Real Estate Association (OREA) said in a statement that it welcomed the changes and worked closely with the province to bring them forward.

“(It strikes) the right balance between adding more transparency to the offer process and protecting a homeowner’s right to sell their home how they want, instead of blanket bans on the traditional offer process,” said association chief executive Tim Hudak.

Some experts see more transparency as a step in the right direction, but do not believe the provincial government’s latest move does enough to make the home buying bidding process fair.

“Making (bid disclosure) optional for sellers doesn’t make sense,” said Sung Lee, mortgage expert with Ratesdotca. “Blind bidding benefits sellers, not buyers. If the goal is to create transparency, this should be mandatory.”

The changes come a week after Ontario premier Doug Ford said that he was “not in favour of adding new regulations” in a video posted on OREA’s Twitter feed.

The move also comes just a couple of weeks after the federal government announced in its latest budget that the minister of housing, Ahmed Hussen, would work with provinces and territories to develop a plan to end blind bidding and implement a Home Buyers’ Bill of Rights.

Somem realtors and housing experts have been pushing back against a full ban of blind bidding, arguing that it will do little to cool the country’s hot housing market and that sellers should decide on how they want to sell their homes.

 

 

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Home sales and average prices fell in March

Peter Evanz
CBC Radio

 Both the average selling price and the number of homes sold declined in March compared to February’s level, according to the Canadian Real Estate Association. (Evan Mitsui/CBC)

Canada’s red-hot real estate market showed signs of cooling down in March as both the number of homes sold and the average selling price declined from the previous month’s level.

The Canadian Real Estate Association (CREA), which represents more than 100,000 realtors across the country, reported Tuesday that on average, homes sold on the Multiple Listings Service went for $796,000. 

That’s down about three per cent from the all-time high of $816,720 the previous month, and a noteworthy change in direction after the unprecedented tear that Canadian home prices have been on for the better part of two years now.

“While the market remains historically very active, March definitely saw a slowdown compared to February in terms of both activity and price growth,” CREA chair Jill Oudil said. “One month does not make a trend, so we’ll have to wait and see if this is the beginning of the long-awaited cooling off of this market.”

Average selling prices were down, as was the actual volume of homes sold. Total sales came in 5.4 per cent lower in March than they did in February. All told, some 54,957 homes were sold during the month. That’s a decline of 16 per cent from the all time record of nearly 67,000 that did in the same month a year earlier. 

March is typically a strong month for home sales, but instead the month represented the biggest one-month decline in sales since June.

Though down from February’s level, the average selling price is still up by more than 11 per cent compared to where it was a year ago. But that pace of increase is slowing, too. March’s annual increase is about half the 20 per cent annual gain clocked in February.

A ‘marked slowdown’

CREA says the national average price number can be misleading because it is so easily skewed by sales in big expensive markets like Toronto and Vancouver. So the realtor group trumpets a different number, known as the House Price Index (HPI), as a better gauge of the market because it adjusts for the volume and type of housing.

The HPI increased by one per cent in March, a “marked slowdown” from the 3.5 per cent increase in February, CREA noted. As is the case with the national average, however, the HPI is still up an eye-popping 27 per cent on an annual basis.

Nasma Ali says she’s seen signs of a slowdown in Toronto, where she’s a broker and founder of One Group Real Estate. While the numbers released Tuesday are for March, she says the trend has become even more pronounced in April, where “buyer fatigue” may be setting in after the Bank of Canada hiked its interest rate twice in the last two months, and is expected to raise it even more in the coming months.

“I just think that this is kind of the beginning of a slower market, maybe a more balanced market,” she told CBC News in an interview. “We’re kind of at the top … we’ve just started to go down a little bit [but] I just don’t know how long or how low that that downward will be.”

WATCH | Market sentiment has changed, Toronto realtor says:

 

Toronto realtor says market has slowed

Nasma Ali says many owners who bought earlier this year are now feeling the pressure as they try to sell into a market that’s showing signs of cooling down. 0:40

Toronto home owner Syed Azhar Shah is one would-be seller who’s having to adjust their expectations down a little in the current market. Shah listed a home for sale in February, but recently took it off the market after being underwhelmed by what he was being offered.

“We had only about nine showings, and there was only one offer, which was much below what we wanted,” Shah told CBC News.

Shah says he may consider relisting the home in a year or so, but regardless he says he’s “quite disappointed” at the moment. “We are not going to get the prices … that we were getting in February,” Shah said. 

 

Toronto homeowner Syed Azhar Shah recently put a house up for sale in the city but was underwhelmed by the offers. (Doug Husby/CBC)

Another formerly red hot large market, Vancouver, is also showing signs of cooling. 

The average selling price in Greater Vancouver was $1.29 million in March, down slightly from $1.32 million the previous month. Prices are still up from $1.16 million a year ago, but realtor Leo Wilke with Engel & Völkers says the pace of increase is slowing. “The escalation that was happening during COVID was just so crazy,” he told CBC News in a recent interview. “One guy sells for X, the next guy gets more, the next guy gets more.”

“Now, what we’ve seen is we’ve kind of levelled off from that,” Wilk said.

Robert Kavcic, an economist with Bank of Montreal, says it’s too early to tell if March represents a blip or the start of a new downward trend, but he suspects the latter.

“Keep in mind that last March was the absolute summit of the pandemic demand mountain, so the reported year-over-year drop is somewhat exaggerated,” he said in a note to clients Tuesday. “There are signs that the appetite is pulling back amid higher mortgage rates, and the decline in March might be the first in a longer series of softening trends.”

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Potential high-rise site in North Delta sells for $16 million

Fraser Elliott Commercial
Western Investor

The 0.73-acre site in the Scott Road corridor of Delta, B.C., sold at the full asking price.

Property type: Land for development

Location: 9321 120 Street, Delta, B.C.

Land size: 31,255 square feet

Land size in acres: 0.738  acres

Zoning: C1

Potential: High-risetower in the Townline Innovation District 

List price: $16 million

Sale price: $16 million

Date of sale: January 13, 2022

Brokerage: Fraser Elliott Commercial,  Vancouver

Broker: Fraser Elliott

 

© 2022 Western Investor

Huge Burnaby condo development sold by troubled China Aoyuan for $215M

Chris Campbell
other

Company was facing a cash crunch due to a debt crackdown, leading to a rare sale of a project so far into the city approval process.

 A major Burnaby condo development in the Brentwood area that’s been working its way through the city’s approvals process has been sold to another developer – a rare occurrence in a hot real estate market.

China Aoyuan – which has been struggling as China has place debt ceilings on companies, leaving those companies short of cash – has sold The Grove project to Anthem Properties Group for $215 million, according to Bloomberg Tax.

The Grove is a major development on eight acres of land planned between Willingdon and Alpha avenues and Dawson and Alaska streets in the Brentwood town centre, just one block away from the SkyTrain station. Four phases are planned with an estimate 2,400 units eventually built if all phases are approved by the city.

Phase 1 of the development involves a space of roughly 9,800 square metres, mostly fronting onto Dawson Street. Two market strata 34- and 41-storey highrises are planned on top of two storeys of commercial use, and a six-storey non-market rental building is planned on top of a one-storey retail base that will run along Dawson Street, turning onto Willingdon Avenue.

That will bring a total of 868 market strata units and 80 non-market units with rents at 20% below the median rate in the neighbourhood, as measured by the Canada Mortgage and Housing Corporation.

It will also bring the first section of a new road, an extension of Juneau Street, which will dissect the city block. The thoroughfare, connecting Willingdon and Alpha avenues, is expected to begin construction in Phase 1 of The Grove, with completion set for Phase 2.

Once Phase 2 is completed, the buildings constructed in Phase 1 will also have a view of a new city park along the north side of Juneau Street. The second phase is also proposed to include a mixed commercial and residential building, while Phase 3 includes three residential buildings. Two more residential buildings are planned for the fourth and final phase.

The site is currently occupied by warehouse and industrial properties, with two strip malls along Dawson Street. The surrounding area includes in-progress and completed developments, including highrises, along with industrial and warehouse properties.

Follow Chris Campbell on Twitter @shinebox44.

 

 

© 2022 Burnaby Now

Kootenays the comer in B.C.’s recreational real estate rush

Peter Mitham
Western Investor

Invermere and the rest of the Kootenays are seeing among the strongest property price gains in Canada as big-city buyers move in from the west and the east

 Invermere: six-acre waterfront site in the master planned Painted Ridge lakefront development priced at $995,000. | Royal LePage Rockies West / DK Rice.

The outflux from big cities that began with the pandemic has increased demand for properties across the Kootenays and north through the Columbia Valley, fueled in part by lower prices, exemption from British Columbia’s speculation tax on secondary homes, and an improving Alberta economy.

Buyers from Vancouver as well as the Okanagan, Alberta and even far away as Ontario have homed in on the region as an affordable alternative to better-known international destinations, local real estate agents say.

“Recreational property in particular benefited as much or more in pricing as the normal residential market, and a lot of it is because of the increase in remote work,” said Phillip Jones, president and owner of Royal LePage East Kootenay Realty in Creston.

“The majority of our buyers for years have come out of the Alberta market – Calgary, Lethbridge, Edmonton, probably in that order. But we’re seeing a lot more coming from the Okanagan, and a lot of it is because of the population increase there. It’s too busy.”

It doesn’t matter if the work is 10 hours or 10 minutes away, Jones added. People are building homes that allow them to enjoy the region’s lakes while maintaining their work lives.

No speculation tax  

Property markets that are outside areas where the province’s speculation and vacancy tax apply have seen strong activity. While the tax applies to residential properties within Kelowna and West Kelowna, the Kootenays and most resort properties are exempt.

“The houses that we see going up on lake properties are amazing,” he said, noting that East Kootenay Realty operates a building division that just built a 6,000-square-foot waterfront house for an Alberta buyer at a cost of $2 million. Another owner spent $3 million on his waterfront residence.

But rising construction costs have increased the number of people looking for resale properties, just at a time when inventories are pinched. The initial surge in buying that followed the lockdowns of 2020 drew down inventories, and now anything that’s coming on the market is seeing multiple offers.

The situation is so intense in markets such as Invermere that the average selling price of a detached home rose 88 per cent last year to $666,000, according to Royal LePage’s annual survey of recreational properties. This was the biggest leap of anywhere in Canada, and four times the 22 per cent increase for B.C.

“With the increase in building prices that we’re seeing, our resale homes have just skyrocketed in value,” said Barry Benson of Royal LePage Rockies West Realty in Invermere. “We have a lot of demand and not a lot of supply.”

Preliminary census data from last year shows that many of the buyers are coming to stay. Invermere, for example, saw its population increase 16 per cent last year versus the previous census in 2016. Radium Hot Springs, best known for its hot springs and resort, saw an even greater increase of 73 per cent.

The closure of international borders has helped draw in more domestic buyers, Benson said. A recent buyer from Alberta recently sold a property in Whitefish, Montana and reinvested a portion of the proceeds in the Invermere area. And there was still enough left over to bank for other uses.

Buyers from Vancouver and the Kelowna area, where lakefront properties now start at $2 million, have done the same.

While borders have opened, most expect demand to stay domestic for the time being thanks to the lingering impacts of the pandemic and the fresh appreciation it created for domestic travel.

The fear of missing out is seen across the province, especially as construction costs put new builds out of reach and demand makes existing stock tough to secure.

“We’re seeing properties coming on the market with multiple offers, selling well above list price in a competitive environment,” Benson said.

The demand could ratchet up if the oil-fired Alberta economy remains strong enough for employers to start handing out bonuses to workers later this year, he suggested.

 

© 2022 Western Investor

Broadway office strata sells at $1,223 per square foot

Nai Commercial
Western Investor

Located on West Broadway, Vancouver, the window-less 511-square-foot unit sold at full list price of $625,000.

Location: 550 West Broadway, Vancouver

Size of unit: 511 square feet

Zoning: C3-A

BC Assessment value: $488,000

List price: $625,000

Sale price: $625,000

Date of sale: April 12, 2022

Brokerage: NAI Commercial, Vancouver

 

© 2022 Western Investor

Main Street two-lot land assembly sells for $11.9 million

Goodman Commercial Inc.
Western Investor

13,410 square foot corner redevelopment site at Main Street at 24th Avenue, Vancouver, is zoned for residential rentals

Gammon International, Vancouver, for Western Investor

 

Type of property: Land assembly

Location: 3970 and 3998 Main Street, Vancouver

Land size: 13,410 square feet

Land size in acres: 0.31 acres

Zoning: C-2

Potential: Residential rental at 2.5 FSR (floor space ratio).

List price: $12.8 million

Sale price: $11.9 million

Date of sale: March 31, 2022

Brokerage: Gammon International, Vancouver

Brokers: Stanley Chiu and Howard Mak

 

© 2022 Western Investor

Woodfibre LNG construction is finally a go

Nelson Bennett
other

Construction to begin in earnest in 2023 on $1.6 billion plant in Squamish

 An old pulp mill site was chosen for the new $1.6 billion Woodfibre LNG plant in Squamish. | Squamish Chief

After years of delays, the $1.6 billion Woodfibre LNG project in Squamish is finally officially a go.

Woodfibre LNG announced today it has issued a notice to proceed to its main contractor McDermott, with major construction to begin in 2023.

Last month, Pacific Energy Corp. approved more than $600 million (US$500 million) in spending for the project in 2022 for pre-construction. Now, the main contractor has the green light to ready the project for full construction to start in 2023.

Woodfibre officially set up its office in Squamish in 2013. Several setbacks have pushed back a final investment decision and construction start date, requiring Woodfibre LNG to get extensions to its environmental certificate.

Woodfibre LNG will be the second LNG plant built in B.C., after the much larger LNG Canada project in Kitimat.

Once construction work begins in earnest, the project is expected to employ a peak workforce of 650 people.

In addition to work on the actual LNG plant in Squamish, FortisBC, which will supply the plant with natural gas, needs to build a new connector pipeline. The 47-kilometre Eagle Mountain-Woodfibre Gas Pipeline will run from Coquitlam to Squamish. FortisBC expects construction to start on that project in 2023.

Compared to the $18 billion LNG Canada project in Kitimat, the Woodfibre LNG project is small, with an annual export capacity of 2.1 million metric tonnes, compared to LNG Canada’s 13 million tonnes.

The plant will be among the first LNG plants to use electric drive, which lowers its carbon emissions intensity to an estimated 0.054 tonnes of CO2 equivalent per tonne of LNG (tCO2e/t). The global average emissions intensity of LNG plants, most of which use natural gas instead of electricity to drive the chilling process, is 0.26 to 0.35 tCO2e/t.

The project has the support of the Squamish First Nation, which has an impacts benefits agreement with Woodfibre LNG, the provincial government and FortisBC that includes $225.7 million in cash and nine parcels of land totaling 422 hectares.

 

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