CMHC expects 5% decline in home prices by 2023 if interest rates spike

Stephanie Hughes
other

But prices will not collapse, says housing agency

 The CMHC report predicts home prices will fall five per cent if the Bank of Canada raises its interest rate to 3.5 per cent. Photo by National Post

A surge in interest rates could drag national home values down by five per cent by the middle of 2023, but would not lead to a collapse in prices, according to a new report from Canada’s housing agency.

The report, authored by Canada Mortgage and Housing Corp. chief economist Bob Dugan, forecasts scenarios for aggressive and moderate rate-hike paths, in each case projecting that a broader economic slowdown and raging inflation will weigh on prices and slow the pace of home construction.

In the high-rate scenario — in which the policy rate would hit 3.5 per cent in early 2023 — national average home prices would fall five per cent to as low as $742,970 in the second quarter of that year before steadily climbing back up. The number of homes changing hands would also decline 34 per cent compared to sales volumes seen in early 2022.

In the more moderate rate-hike scenario — in which the policy rate reaches 2.5 per cent in early 2023 — the Crown corporation expects national home values would slip by three per cent while sales would drop roughly 29 per cent.

The Bank of Canada has so far raised the overnight policy rate three times this year to 1.5 per cent. Many economists are expecting a supersized rate hike of 75 basis points during Wednesday’s monetary policy announcement, which would bring it close to the 2.5 per cent scenario, a “neutral rate” that would neither stimulate nor hinder the pace of economic growth.

Despite the price drops in both scenarios, the CMHC expects housing values will remain elevated.

“Supported by rising household income and higher immigration, house prices are expected to return to positive but moderate growth,” Dugan said. “Elevated price levels persist over the forecast horizon placing pressure on homeownership affordability.”

The CMHC points to several reasons why higher rates are warranted and would disrupt the exuberance in housing markets that became rampant during the pandemic.

The agency noted that during the rebound from the COVID-19 pandemic, household demand has greatly outpaced the supply of goods and services, a situation made worse by supply chain snarls stemming from China’s zero-COVID policy and the Russian invasion into Ukraine.

As the Bank of Canada moves to get ahead of decades-high inflation, the CMHC expects economic growth will begin to ebb, and with it, demand for housing. The report also said the demand for home ownership could decline further than expected with the high costs of living and borrowing.

“Rising rates will cause economic growth to slow,” Dugan said. “This leads to higher unemployment and less wage growth, which coupled with higher mortgage rates will make access to home ownership more challenging.”

Dugan added that rising rates will also boost construction costs and make housing projects more expensive. With labour shortages already in the mix, housing supply is expected to be constrained.

“Taken together, the Canadian housing markets are expected to experience a downturn by mid-2023.”

The CMHC had come under fire for predictions it made during the onset of the pandemic when it forecast price declines of between nine and 18 per cent in June 2020. The agency also tightened mortgage insurance rules, though it  reversed the changes roughly a year later.

 

© 2022 Financial Post

City of Burnaby, BC Housing buy two co-ops for $184.9 million

Western Investor Staff
Western Investor

Two multi-family towers with a total of 405 units will remain as co-operative housing

4221 Mayberry Street, Burnaby. BC Housing for Western Investor

 

Property type: Co-op housing/ Multi-family

Location: 9380-9390 Cardston Crescent and 4221 Mayberry Street, Burnaby, B.C.

Number of units: 405 (total).

Vendor: International Union of Operating Engineers Local 115 Pension Plan

Buyers: BC Housing; City of Burnaby, B.C.

Sale price: $184.9 million (total, includes $22.5 million for upgrades)

 

© 2022 Western Investor

Canadian home sales down again in June, but declines are getting smaller

CREA Staff
BCREA

Statistics released today by the Canadian Real Estate Association (CREA) show national home sales were down in June 2022.

 HIGHLIGHTS

• National home sales fell by 5.6% on a month-over-month basis in June.
• Actual (not seasonally adjusted) monthly activity came in 23.9% below the June record set in 2021.
• The number of newly listed properties was up 4.1% month-over-month.
• The MLS® Home Price Index (HPI) edged down 1.9% month-over-month but was still up 14.9% year-over-year. The actual (not seasonally adjusted) national average sale price posted a 1.8% year-over-year decline in June.

 

Home sales recorded over Canadian MLS® Systems fell by 5.6% between May and June 2022. Although

larger declines were recorded in April and May, monthly activity has dropped to slightly below average levels for the month of June. (Chart A)

Sales were down in three-quarters of all local markets, led by Canada’s biggest cities – the Greater Toronto Area (GTA), Greater Vancouver, Calgary, Edmonton, Ottawa and HamiltonBurlington to name a few.

The actual (not seasonally adjusted) number of transactions in June 2022 came in 23.9% below the record for that month set last year.

“Sales activity continues to slow in the face of rising interest rates and uncertainty,” said Jill Oudil, Chair of CREA. “The cost of borrowing has overtaken supply as the dominant factor affecting housing markets at the moment, but the supply issue has not gone away. While some people may choose to wait on the sidelines as the dust settles in the wake of recent rate hikes, others will still engage in the market in these challenging times. Markets adjust to change and the guidance of your local REALTOR® is paramount. If you’re looking to buy or sell in 2022, contact your local REALTOR® about how to navigate the current environment,” continued Oudil.

“One important feature of the market right now that isn’t getting enough attention is the difference in mortgage qualification criteria between fixed and variable, because while variable rates adjust in real time, fixed rates have already priced in most of what the Bank of Canada is expected to do over the balance of 2022,” said Shaun Cathcart, CREA’s Senior Economist. “As such, it’s no surprise to see people piling into variable rate mortgages at record levels, but probably not for the reasons they may have chosen them in the past. It’s because the 200 basis points plus the contract rate element of the stress test has, just since April, become much more difficult to pass if you want a fixed-rate mortgage. A strict stress test made sense when rates were at a record-low, but policymakers may want to assess if it continues to meet its policy objectives now that fixed mortgage rates are back at more normal levels.”

The number of newly listed homes climbed 4.1% on a month-over-month basis in June. The monthly increase was most influenced by a jump in new supply in Montreal, while new listings in the GTA and Greater Vancouver posted small declines.

With sales down and new listings up in June, the sales-to-new listings ratio eased back to 51.7% – its lowest level since January 2015. It was also below the long-term average for the national sales-to-new listings ratio of 55.1%. Almost three-quarters of local markets were balanced markets based on the sales-to-new listings ratio being between one standard deviation above or below the long-term average in June 2022.

There were 3.1 months of inventory on a national basis at the end of June 2022, still historically low but slowly increasing from the tightest conditions ever recorded just six months ago. The long-term average for this measure is more than five months.

The Aggregate Composite MLS® Home Price Index (HPI) edged down 1.9% on a month-over-month basis in June 2022.

Regionally, most of the monthly declines were seen in markets in Ontario. Home prices have also eased in parts of British Columbia, although the B.C. provincial totals have been propped up by mostly static prices in Greater Vancouver.

Prices continue to be more or less flat across the Prairies while only just now showing small signs of declines in Quebec.

On the East Coast, prices are mostly continuing to rise but appear to have stalled in Halifax-Dartmouth.

The non-seasonally adjusted Aggregate Composite MLS® HPI was still up by 14.9% on a year-over-year basis in June, although this was just half the near 30% record year-overyear increases logged in January and February. (Chart B)

 

The actual (not seasonally adjusted) national average home price was $665,850 in June 2022, down 1.8% from the same month last year. The national average price is heavily influenced by sales in Greater Vancouver and the GTA, two of Canada’s most active and expensive housing markets. Excluding these two markets from the calculation in June 2022 cuts almost $114,500 from the national average price.$114,500 from the national average price.

 

© THE CANADIAN REAL ESTATE ASSOCIATION

Canada home prices see biggest drop since at least 2005

Fergal McAlinden
other

Another significant monthly decline was posted in June

 Canadian home prices posted their largest monthly decrease since at least 2005 in June, according to new figures released by the Canadian Real Estate Association (CREA).

The national benchmark price of a home slipped by 1.9% over the previous month, CREA said, the most significant month-over-month drop in data going back 17 years and marking a third consecutive month of price depreciation.

Home sales also edged down again, falling by 5.6% in June compared with May as monthly activity on a non-seasonally-adjusted basis plummeted 23.9% over the same month last year.

That news arrives amidst a series of sizeable interest rate hikes from the Bank of Canada, with its Wednesday announcement of a one-percentage-point increase signalling the largest jump in its benchmark rate since 1998.

Sales had dropped in 75% of local markets across the country in June, CREA said, as Canada’s largest cities including Toronto and Vancouver posted significant month-over-month decreases.

Jill Oudil, CREA’s chair, said that rising interest rates and growing economic uncertainty had contributed strongly to the continued cooling of the Canadian housing market.

“The cost of borrowing has overtaken supply as the dominant factor affecting housing markets at the moment, but the supply issue has not gone away,” she said.

“While some people may choose to wait on the sidelines as the dust settles in the wake of recent rate hikes, others will still engage in the market in these challenge times.”

There were more newly listed homes on the national market in June, with a 4.1% monthly increase across the country driven mainly by higher supply in Montreal as inventory in the Greater Toronto Area (GTA) and Greater Vancouver Area (GVA) tightened.

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Rules are different when buying your second home

Shawn Conner
The Vancouver Sun

What buyers should know before financing a recreational property
It’s important to know the local short-term rental bylaws when purchasing a recreation property to rent out. Photo by Stephen Bridger /Getty Images/iStockphoto
Vernon-based mortgage specialist Deb White sees many people buying secondary properties in her area. Many of these buyers are from the sprawling city and hoping for a bit of peace, quiet and wide-open spaces. But the rules are a little different when purchasing a second mortgage.
For one thing, a secondary property requires a minimum down payment of 20 per cent, not five, as for a first home.
“Buyers have to qualify for both their primary and secondary residences at two per cent over the posted rate, without any rental income,” White said.
After spending so much time at home the last two years, it’s no surprise that people are looking for relief from the density and noise of the city.
“They want to be close to the lakes and away from the busy-ness of Vancouver, so they’re buying second homes,” White said. Most aren’t straying too far from towns.
“Out in the country, it’s a little bit harder for them. Then it’s too far from the mainstream. We don’t have a lot of people buying secondary homes in Williams Lake and Prince George area. It’s more from Salmon Arm down to Osoyoos.”
People looking to build on bare land face an even steeper obstacle. Bare land requires 50 per cent down.
“It’s super, super hard,” White said. “Five years ago, I was able to get bare land, depending on location, with 25 per cent down. Now the lenders want a building plan in place. They want to see a contract with the builder; they want to see the finished project.”
The more stringent requirements are due to risk, she says.
“With building costs, sometimes it’s cheaper to buy an already-built home than to build a home.”
White also notes that some types of homes are tricky to finance.
“A lot of people think that all they can afford is a mobile home, or a manufactured or modular home. But what happens is that, in our area, in the Interior and up north, CMHC will give a modular or manufactured home a life span of 40 years. As the age of the mobile goes up, your amortization and payments will increase.”
Buyers need to look at the bylaws in the area they’re considering.
“People come up here thinking they are going to renovate their new home and put a suite in the basement and Airbnb it. But then they find out that the bylaws don’t allow for that. I have found in realtor’s documents that they’re adding that as a condition, confirming the bylaws in the area.”
Lenders are hesitant to finance Airbnb dreams. “They are not looking at those favourably. We don’t have a lot of lenders who will use Airbnb income.”
Most of her clients for secondary properties are between 40 to 60 years old and looking for a no-muss, no-fuss investment.
“When they’re buying a second home up here, they want to not have to worry about it. Nine times out of 10, we’re finding people buying in complexes so they can come here, do what they want to do and have some fun and not have to worry about taking care of the yard or hiring someone to take care of the yard.”
White recommends doing due diligence and finding a realtor who knows the area well.
“We had a realtor help clients buy a property up here, and it went for way over asking,” she warned. “Make sure you know the area and talk to the locals. That’s my biggest advice.”

© 2022 Vancouver Sun

‘This is just the beginning’: First Nations’ real estate mega projects game-changing for Metro Vancouver

Dan Fumano
The Vancouver Sun

Indigenous developers to build 25,000 new homes in Metro Vancouver

 Wilson Williams is an elected councillor with the Squamish First Nation, photographed at the site of the planned Sen̓áḵw development. Photo by Francis Georgian /PNG

Standing between a pair of gleaming apartment buildings, a condo tower, a park, a future grocery store, and massive holes in the ground that will soon provide a daycare, community centre and hundreds of additional homes, Musqueam Chief Wayne Sparrow said: “This is the future.”

After many years and steep legal bills, the Musqueam First Nation reached a landmark settlement with the B.C. government in 2008, for the return of some of its traditional territory. Now the Musqueam are using some of those lands near the University of B.C. to provide badly needed housing for the broader community and generate economic prosperity for their Nation.

Sparrow welcomed a group of elders to visit Leləm̓, the village their Nation has built in partnership with Polygon. The housing includes market and below-market rentals and leasehold stratas on 99-year leases.

That leasehold structure is crucial, emphasized Sparrow. It could have been more profitable in the short term, he said, to develop the land and sell condos outright. But that was never really a consideration.

“We’re never selling the land,” Sparrow said. “It took us 100-some-odd years to get it back. We ain’t gonna sell it after going to court to fight to get it back.” 

 

Musqueam Chief Wayne Sparrow with Polygon Homes CEO Neil Chrystal. Photo by Francis Georgian /PNG

The Leləm̓ community is just one of several major real estate developments in the pipeline from Vancouver-area First Nations, who have emerged as powerhouse developers in a region desperate for solutions to a housing shortage.

Postmedia analyzed eight major projects involving the Musqueam, Squamish and Tsleil-Waututh Nations, both individually and together under their MST Development Corporation joint venture. Their plans cover nearly 1.1 square kilometres of property in Vancouver, Burnaby and the North Shore, promising more than 25,500 homes.

That’s more than the total number of homes that exist today in the city of Port Coquitlam.

These megaprojects, which include social housing, market rentals, condos and townhouses, plus schools, retail, cultural amenities and commercial spaces, are in various stages. Residents started moving into Leləm̓ last year. Sen̓áḵw in Vancouver is scheduled to be done in five years. Others are a decade or more away from completion.

Like Leləm̓, all these major projects feature rental homes and leasehold stratas, meaning the First Nations retain ownership of the land underneath. The importance of this fact comes up repeatedly in conversations with local Indigenous leaders: the Nations will always own the land.

This is not new. For decades, the Musqueam Nation has generated revenue through rental and leasehold housing on their reserve on Vancouver’s southern edge. The Tsleil-Waututh Nation has built and sold more than 1,000 leasehold condos and townhomes on reserve land.

But the MST Nations’ real estate activity today is on a completely different scale than in the past, and observers say it is beyond what other Indigenous developers are doing elsewhere in Canada. Today, the joint venture’s portfolio of developable prime urban real estate, and the number of units in the pipeline, make it one of B.C.’s largest developers.

MST Development’s CEO, David Negrin, recently put it in perspective while speaking to business and Indigenous leaders from across Canada at a meeting in Vancouver. Negrin, a three-decade industry veteran who was previously president of Aquilini Development, said in May that MST’s land holdings are valued at around $5 billion, which will be closer to $7.5 billion after their planned acquisition of another 0.75 of a square kilometre. By the time those properties are developed, Negrin estimated, the value of the portfolio will be closer to $30 billion.

 

“I’d say this: The most powerful developer in North America right now is MST, the three Nations coming together,” Negrin told the panel.

That “coming together” is a key point for many inside and outside the three First Nations. 

 

Tsleil-Waututh Nation Coun. Dennis Thomas. Photo by Francis Georgian /PNG

Historically, the three Nations shared land, resources and family ties going back several generations, coexisting harmoniously, said Tsleil-Waututh Nation Coun. Dennis Thomas. “But as soon as colonization came and the Indian Act, we started fighting, because it’s like divide and conquer. … So for 100-plus years, we’ve wanted to get back to that harmonious and holistic table.”

Thomas and others have credited the 2010 Vancouver Olympics as bringing the Nations together. In the years following the Olympics, the Nations’ leaders worked together to reach a protocol agreement, which was signed in 2014, creating the MST Development Corporation.

Thomas recalled a past Tsleil-Waututh leader telling him: “You can have 33 per cent of something or 100 per cent of nothing.”

Now, the Nations are collaborating on what could become the first Indigenous-led bid in Olympic history, eyeing the 2030 Winter Games. The official Games concept, released last month by the Nations and the Canadian Olympic Committee, envisions using MST developments — it’s expected that could be the Heather or Jericho Lands properties — for an athletes’ village for athletes and team officials during the 2030 Olympics and then provide housing, including a non-market component, after the Games.

Other First Nations across Canada could learn from the MST story, said Ginger Gosnell-Myers, a fellow with SFU’s Morris J. Wosk Centre for Dialogue, who focuses on decolonization and urban Indigenous planning.

 

“In other cities, (other First Nations) have overlapping land claims, and until they come together and agree to work in partnership as a family, they will continue to compete with one another and continue to miss opportunities,” she said.

“They will only succeed if they come together, and MST is demonstrating the success of that. Other communities haven’t caught up, but we’ll see how much things change in the next few years.”

Gosnell-Myers is happy the MST Nations have started to get “the visibility and respect they deserve, and an opportunity to really mark their stamp on their own land.”

But, she added, “these early projects, as impressive as they are, we’re still seeing some shortfalls that I think future projects will hopefully be able to address.”

The shortfalls, Gosnell-Myers said, include concerns she hears from some MST members that there aren’t more affordable homes in these megaprojects designated for members of the Nations.

“One concern I hear from MST members on the ground is: ‘Who is this even for? People are getting rich and it’s not us,’” Gosnell-Myers said. 

 

Ginger Gosnell-Myers, with SFU’s Morris J. Wosk Centre for Dialogue. Photo by Francis Georgian /PNG

MST Development Corporation is directed by a board of elected councillors from the three nations. But the lack of MST members in the corporation’s senior management roles is something the current, non-Indigenous executives themselves want to change, said Brennan Cook, MST Development’s vice-president of development and acquisition.

The goal is for the CEO and other top jobs to one day be filled by MST members, Cook said.

Story continues below

“I’d like to see that day sooner rather than later,” Cook said. “I really love working with the Nations, but if David (Negrin, the CEO) and I do a really good job, we’ll be out of a job. And I would sleep well knowing that MSTDC is in good hands.”

For many of these megaprojects, the MST Nations have been partnering with some of B.C.’s largest developers: Polygon, Westbank, Aquilini.

A relatively small townhouse project planned in West Vancouver will be the first project MST Development handles on its own, and that is the eventual goal for all projects, Cook said. “In the future, development partners won’t be needed.”

Leaders from the Nations, including Sparrow and Thomas, say another part of the vision includes having more band members working on projects.

Thomas, who is completing his MBA at Simon Fraser University, said there is already a surge of interest among young Nation members in careers spinning off from these megaprojects: engineering, property management, architecture, electrical, plumbing, construction, interior design, real estate development, marketing.

“The careers are endless,” Thomas said. “Before, we were hunters and gatherers. Today, we’re modern-day hunters: We get degrees, we get MBAs to help provide for our Nations.”

The MST Nations’ real estate ventures have been applauded by local political leaders, and garnered positive international attention from the likes of The Economist and New York Times.

But not everyone is happy. Neighbours near some of the proposed developments have raised concerns about their size.

After concepts for MST’s plans at Jericho Lands were released earlier this year, including towers up to 38 storeys, a group of West Point Grey residents organized in opposition, hiring a well-known lobbyist and communications professional, and now city council candidate, Bill Tieleman, who told CTV News the fight against MST building tall towers at Jericho was part of “a battle for the soul of Vancouver.”

Last week, the Kits Point Residents Association issued a press release that said while they support the Squamish Nation’s ability to develop its own lands, they consider the high-density Sen̓áḵw proposal for Kits Point — of 11 towers of up to 57 storeys — “shockingly outside the boundaries” of existing city plans, resources and zoning.

This particular debate highlights the complexities of developing on reserve land, such as the 10-acre parcel near the south end of the Burrard Bridge where the Squamish Nation is planning Sen̓áḵw.

Half of the projects analyzed by Postmedia are MST joint ventures on “fee-simple” properties, which were acquired from the provincial and federal governments and must go through the same municipal rezoning processes as other major projects from private-sector and non-profit developers.

The Heather Lands, for example, received a rezoning approval in May from Vancouver council, the first MST joint venture to reach this stage, but still requires additional permits from city hall before construction can begin, which likely won’t be until 2024, almost a decade after planning began on the project.

In the other half of the projects, one of the Nations has individually partnered with a developer. If property is being developed is reserve land, as is the case with Sen̓ákw, municipal governments do not have the same authority. This has allowed the Squamish Nation to pursue far greater density for Sen̓ákw than the neighbouring area — and move far faster.

The Squamish Nation membership voted in 2019 with 87 per cent in favour of pursuing the project, with partner Westbank. Only three years later, they expect they could break ground on the project this year, a speed that would be unheard of for a 6,000-unit development going through city hall.

At a panel talk last month hosted by The Vancouver Sun, Bernd Christmas, CEO of the Squamish Nation’s economic development arm Nch’ḵay̓, said Sen̓ákw is not some kind of “Wild West” development. He insisted it is heavily regulated and rigorously planned, with environmental assessments, high architectural standards, and the rest.

“But we’ve just learned the secret of making it go quicker, by about five to 10 years,” Christmas told the panel, which included some of the biggest names in B.C.’s development industry. “If you have developments that are facing six-year, 10-year delays, come see us. Let’s move.”

The Tsleil-Waututh Nation has been trying for years to develop a large mixed-use community combining residential, commercial, educational, retail and community uses just off the Dollarton Highway, in partnership with Darwin Construction. But they faced “roadblocks” with the District of North Vancouver, “including three rejections of our rezoning application” in 2018 and 2019, the Tsleil-Waututh chief and council wrote last year in an op-ed in The North Shore News.

So, in 2019 the Tsleil-Waututh Nation decided to apply to the federal government to add the property to its reserve lands.

That “addition to reserve” application is under review by the federal government. If Ottawa approves it, that means the district council will lose any power to determine how the land is used or collect tax revenue on it.

The Kits Point Residents Association said this week that city leaders saying they “effectively have no jurisdiction” over Sen̓ákw is “an abdication” of their authority, arguing the municipality should have the power to negotiate plans for the site because it will rely on city services like water and sewer.

Vancouver Mayor Kennedy Stewart said those residents are not wrong about reserves relying on municipal services. But he disagrees with their point.

There is “a long-held colonial practice” of Canadian municipalities withholding services from First Nations reserves in urban and suburban areas, Stewart said. “We have an obligation to provide services as a good neighbour. To use that as a tool for blackmail really isn’t in the spirit of reconciliation.”

“That is a colonial approach, and you’ve got to get a different mayor if that’s what you want, because that’s not what I’m about,” Stewart added.

A services agreement between the Squamish Nation and the city is nearly finalized, and the mayor predicted it will not generate many complaints from Vancouverites when it’s released publicly.

“I think it could be used as a template for the rest of the province,” Stewart said. “We’ll be talking to other municipalities about it once it’s fully released.” 

 

Wilson Williams is an elected councillor with the Squamish First Nation. Photo by Francis Georgian /PNG

Sen̓ákw has been described as groundbreaking — by both supporters and detractors — but it could be just the beginning. The Squamish Nation alone has dozens of parcels of reserve land, including along the North Shore, up the Howe Sound to Whistler, and on the Sunshine Coast. And that is just one First Nation.

Squamish First Nation Coun. Wilson Williams wouldn’t disclose details, but confirmed the Nation is discussing “a list of potential land developments.”

“We’re listening to our people and our ancestors who helped us get here,” Williams said. “There’s a lot of potential … but we want to do it the right way.

“We’re thinking seven generations down the road.”

At the housing panel last month, the Nch’ḵay̓ CEO responded to a question about how B.C. municipalities can try to meet the desperate need for rental housing.

“Really, to me, it’s very simple,” Christmas said. “There’s over 200 First Nations in this province. Why aren’t developers going to the First Nations? Why go to municipalities?”

At that point, Christmas’s fellow panelist, Joy MacPhail, the former B.C. deputy premier who chaired an expert panel last year set up by the B.C. and federal governments to make recommendations on housing affordability and supply, leaned toward Christmas and, over audible laughs from the audience, asked him with a smile: “Did you bring business cards?”

Later in the evening, Christmas told the crowd: “I’d suggest that any developers that want to do stuff here in the traditional territory of Squamish — 6,700 square kilometres — yes, we’re open for business.”

Johnna Sparrow, the Aboriginal relations adviser for Aquilini Development who previously worked for the Musqueam, said these projects will always face some detractors. But she added people should remember that local First Nations had vast tracts of land that provided abundant resources for them to live, until it was violently taken away from them.

Those traditional ways of life — fish, hunting, vegetation — are now depleted, so instead the Nations are looking to generate other economic opportunities from the land.

“This is just the beginning,” Sparrow said. “It’s a long road ahead of us, but it’s one that we have to create in order to break the mould of dependence on the government and criticism from the general public about we get everything for nothing, when everything’s been taken away from us. We’re still here. And we’re not going anywhere.”

Eight big projects

Eight of the major Indigenous-led developments in Metro Vancouver:

• Sen̓ákw in Vancouver: From the Squamish Nation and Westbank, it promises 6,000 new homes, mostly rentals, near the Burrard Bridge. It is expected to be completed by 2027, and will include 250 affordable units for Squamish Nation families. 

Aerial illustration of the proposed Sen̓áḵw development in Kitsilano, near the Burrard Bridge. Photo by Senakw website

• Jericho Lands on a third of a square kilometre site in West Point Grey is a project by MST and the Canada Lands Company, which is to build some 10,000 new homes for up to 18,000 residents.

Handout rendering of Jericho Lands Concept. Photo by Hariri Pontarini Architects with Urban Strategies Inc.

• The Heather Lands, a 15-year project to build 2,600 homes in South Cambie, is by MST and Canada Lands Company. It would also include shops, parks, a daycare, a cultural centre and a forest trail.

 Handout out concept illustration for Heather Lands in Vancouver. Photo by Matthew Thomson

• Willingdon Lands is a joint venture by the Musqueam and Tsleil-Waututh Nations, and Aquilini Investment Group, to build 5,239 units of housing that includes leasehold strata, market rental, and affordable rental. It is also to include a daycare and two large parks with a network of trails.

Artist rendering of part of the 40-acre Willingdon Lands project to be located in Burnaby, being planned by the Musqueam and Tsleil-Waututh, and Aquilini Development. Photo by aquilinidevelopment.com

• Marine Drive Lands is to produce 150 townhouses on five acres in West Vancouver by MST with no outside developer. The project is to support the “missing middle,” seniors and young families. 

Artist rendering of 150 new townhouses to be built at 4195 Marine Drive in West Vancouver. This proposal includes three townhouse buildings, at three storeys in height. Photo by MST Development

• Leləm̓ is a joint venture by Musqueam and Polygon, Townline and other development partners, to build a 21-acre community near UBC that, within 10 years, is to have approximately 1,250 homes. Residents started moving into homes in the first completed buildings last year, and future phases will build  additional homes, a community centre, daycare and retail.

An artist rendering of the West Wind building, part of the Leləm̓ development near UBC. jpg

• The Tsleil-Waututh, in partnership with Darwin Construction, hopes to build the large Statləw̓ District project in North Vancouver, to include work, school and retail services, and homes. It is under review by the federal government.

The Tsleil-Waututh, in conjunction with Darwin Construction, hopes to build a big development  in North Vancouver, to include work, school and retail services, and up to 275 housing units. It is under review by the federal government. jpg

• MST and Aquilini also plan to develop the former B.C. Liquor Distribution Centre in Vancouver. Few details are known yet, although developers told city hall the project would include “residential, light industrial and commercial uses”.

An early artist rendering of the development at 3200 East Broadway by the MST Development Corporation and Aquilini Development. This project is still in the early stages of planning. Photo by aquilinidevelopment.com

 

© 2022 Vancouver Sun

Bank of Canada issues shock rate hike in effort to crush inflation

Kevin Carmichael
other

 Bank of Canada Governor Tiff Macklem takes part in a news conference in Ottawa

The Bank of Canada delivered a jolt to Bay Street, raising its benchmark interest rate a full percentage point, the biggest one-time increase since August 1998, when the central bank was fighting to protect the value of the currency during the Asian financial crisis.

Canada’s benchmark borrowing rate is now 2.5 per cent, compared with 1.75 per cent ahead of the COVID-19 recession. The aggressive move is all about inflation, which the Bank of Canada predicts will accelerate to around eight per cent this summer, way too fast for policymakers whose job it is to keep the consumer price index advancing at an annual rate of about two per cent.

“Surveys indicate more consumers and businesses are expecting inflation to be higher for longer, raising the risk that elevated inflation becomes entrenched in price- and wage-setting,” the Bank of Canada said in a statement. “If that occurs, the economic cost of restoring price stability will be higher.” 

 

Here’s what you need to know:

Panic move

Governor Tiff Macklem’s crew of policymakers barely tried to conceal their alarm over recent data that suggests companies and households are starting to see inflation as permanent.

“With the economy clearly in excess demand, inflation high and broadening, and more consumers expecting high inflation to persist for longer, the Governing Council decided to front-load the path to higher interest rates by raising the policy rate by 100 basis points today,” the Bank of Canada said in a statement.

Central bankers have nightmares about the public losing faith in their ability to keep inflation low and stable. Most think one of the lessons of the 1970s and early 1980s is that suppliers and workers won’t overreact to temporary surges in commodity prices if they think the central bank will keep a lid on inflation.

It’s been four decades, however, since Canadians have seen inflation like they’ve seen in 2022. Macklem came of age as an economist while former United States Federal Reserve chair Paul Volcker was winning his war on inflation by jacking up interest rates to double digits. The Canadian decided a demonstration of his own resolve was necessary to avoid a repeat of the painful recession Volker’s strategy caused.

“It’s a little bit of a `wow’ moment,” said Tom O’Gorman, director of fixed income at Franklin Templeton Canada, the Canadian unit of Franklin Templeton Investments Corp. “They’re nervous.”

The Bank of Canada estimates the “neutral” rate — a theoretical setting at which the central bank’s benchmark rate neither helps nor hinders economic growth — is between two per cent and three per cent. The policy rate is now in that zone, but policymakers made it clear they aren’t finished.

“The Governing Council continues to judge that interest rates will need to rise further, and the pace of increases will be guided by the bank’s ongoing assessment of the economy and inflation,” the statement said. “The Governing Council is resolute in its commitment to price stability and will continue to take action as required to achieve the two-per-cent target.”

The Governing Council continues to judge that interest rates will need to rise further

Macklem previously said he might have to push the benchmark rate above three per cent to get inflation under control. With prices accelerating into the second half of the year, rather than slowing, it’s become more likely that policymakers will have to push interest rates to a level that hinders economic growth.

The decision to “front-load” the shift to higher interest rates was based on an that would have startled Macklem and his deputies when staff economists presented it. Here are the highlights:

The central bank sees year-over-year increases in the consumer price index averaging eight per cent in the third quarter, and ending the year 7.5 per cent higher than at the end of 2021, compared with a previous estimate of 4.5 per cent. The Bank of Canada now assumes the consumer price index will still be above three per cent at the end of 2023 (compared with a previous estimate of 2.4 per cent). The central bank’s projection has inflation returning to target in 2024.

Higher interest rates and costs are starting to bite. The Bank of Canada predicts gross domestic product will expand 3.5 per cent in 2022, compared with an April estimate of 4.2 per cent, and then slowing to 1.8 per cent in 2023, compared to 3.2 per cent forecasted previously. That would be what economists call a “soft landing” from the shock of higher interest rates, and Macklem will have orchestrated an impressive manoeuvre if he can pull it off. In the past, sharp increases in borrowing costs have tended to cause recessions.

Few, if anyone, on Bay Street saw a full one-point increase coming. Most reckoned the Bank of Canada would follow the Fed and lift the benchmark rate by three-quarters of a point.

Macklem and his deputies had an incentive to outdo the Fed. Typically, higher oil prices cause the value of the Canadian dollar to rise. But for whatever reason, the exchange rate has been roughly stable even as international oil prices surged above US$100 per barrel. That has contributed to inflation because a weaker currency makes imports more expensive.

An important factor in determining exchange rates is interest-rate differentials between various central banks. By going bigger than the Fed and other major central banks, the Bank of Canada will jolt traders into rethinking the values they assign to various currencies. The loonie should get a lift, which would lean against inflation — at least until the next Fed policy meeting, when chair Jerome Powell will have to confront his own inflation threat.

Ahead of the Bank of Canada’s announcement, markets learned the U.S. consumer price index increased 9.1 per cent in June from a year earlier. “The Fed will probably do 100 now,” O’Gorman said. “It’s the new arms race.”

The Canadian dollar traded as high as about 77.3 cents against the U.S. dollar, compared with about 77.8 cents ahead of the interest-rate increase. The exchange rate drifted back towards 77 cents as the day wore on.

“A sharp slowdown in the housing market is underway,” the Bank of Canada said in its new quarterly economic outlook.

is perhaps the industry most sensitive to interest rates. Demand and prices skyrocketed when the Bank of Canada dropped the benchmark rate to almost zero, and now the froth in markets such as Toronto is quickly dispersing as borrowing costs rise.

The biggest change in the Bank of Canada’s forecast for economic growth is its outlook for the contribution from housing, which it now sees subtracting 0.7 percentage points from gross domestic product in 2022 and an additional 0.6 percentage points from its 2023 GDP calculation. (The April estimate had housing subtracting 0.2 percentage points from GDP in 2023.)

Five-year fixed mortgage rates are now at their highest in more than a decade.

Central banks have spent the past decade thinking about the extent to which they test old relationships between employment and inflation, because there was plenty of evidence that they could probably run their economies hotter than they thought. Still, price stability remained the primary mission, and since it is now clear that inflation isn’t slowing on its own, the Bank of Canada decided to go with a shock-and-awe increase to show the public it’s serious about getting price pressures under control.

Recent data showed that companies and households are starting to bake expectations of higher inflation into what they charge for goods and services and what they expect to be paid for their labour. That risks an inflation spiral that would require a recession to stop. By moving aggressively now, policymakers hope they are pre-empting a bad outcome.

 

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Veteran Vancouver property management firm sold

Tribe Property Technologies Inc.
Western Investor

Martello Property Services Inc., founded in 1988, purchased by Tribe for $720,000

Property type: Property management firm

Location: Vancouver

Assets: 1,500 strata properties managed in Greater Vancouver

Sale price: $720,000

Date of sale: July 12, 2022

Closing date: July 31, 2022

Vendor: Martello Property Services Inc., Vancouver

Buyer: Tribe Property Technologies Inc., Vancouver

© 2022 Western Investor

Bank of Canada announces huge rate hike

Fergal McAlinden
other

The central bank’s rate increase is even higher than had been widely anticipated

The Bank of Canada has announced a supersized rate hike, increasing its policy rate by 1% in a bid to stave off rampant inflation and curb sharp increases in consumer price growth.
The move marked a larger increase than had been anticipated, with most economists and observers having expected a three-quarter-point hike, and brought its trendsetting interest rate to 2.5% – well above its pre-pandemic level.
Expectations of a significant increase to the Bank’s policy rate had grown after Canada’s inflation rate recently hit a 39-year high, and following an oversized hike by the US Federal Reserve in June.
Inflation has been steadily creeping upward for the best part of a year, continuing to surge in recent months and recently hitting 7.7% despite the Bank’s earlier confidence that it would be a “transitory” phenomenon.
Having long indicated that rates needed to start rising – and signalled its intention to act “aggressively” on the issue – the central bank has now increased its policy rate by a total of 2.25% in 2022, with a quarter-point hike in March followed by consecutive half-point increases in April and June before its latest announcement.
Read next: Bank of Canada rate hikes could cause recession, says economist
The move is likely to apply further downward pressure to home sales and prices that have already cooled significantly in recent months in the country’s busiest housing markets.
In Toronto and Vancouver, which both witnessed record activity and huge price growth during the pandemic, house prices have begun to slide since March, while Greater Toronto Area (GTA) sales have plunged 41% year over year and Greater Vancouver posted a 35% decline.
Further central bank rate hikes appear inevitable despite that housing market slowdown. The Bank will attempt to bring inflation expectations back to 2% “come hell or high water,” according to David Macdonald, senior economist at the Canadian Centre for Policy Alternatives.
The housing market will be the “first casualty” of rate hikes, he told Canadian Mortgage Professional in recent weeks, with the central bank “not terrifically concerned” about house prices.
In a note to clients last week, Bank of Montreal chief economist Doug Porter said while the housing market was showing signs of strain, and recession calls were increasing, those risks “simply cannot and will not sway the Bank from soldiering on.
“The risk of recession has to be a secondary consideration to the reality of red-hot inflation,” he added.
The Bank is scheduled to make its next policy rate announcement on September 07.

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Bank of Canada announces huge rate hike

Fergal McAlinden
other