Archive for the ‘Real Estate Related’ Category

Expect rapid post-pandemic recovery – BoC’s Poloz

Monday, May 25th, 2020

Quick recover expected post pademic

Ephraim Vecina
Mortgage Broker News

Despite multiple headwinds and the continuous ravages of COVID-19, Canadian market activity and purchasing power will be able to recover quickly after the outbreak eases, according to outgoing Bank of Canada Governor Stephen Poloz.

“We have to be able to manage the risks around those things, so I’m not going to dismiss [the worst scenarios],” Poloz told BNN Bloomberg. “But, me personally, I do think on balance what I’m hearing, the flow that I’m hearing, is a little too dire, a little bit overblown.”

In the greater scheme of things, the coronavirus will not be a fatal roadblock, Poloz said. While the national economy is still on track to decline at least 15% this year, “you should see a very rapid return to production” once the economy restarts in late 2020, he said. “I’m relatively optimistic, what I find, compared with what the talk is.”

These predictions dovetailed with other observers’ forecasts of speedy post-pandemic recovery across the board, pointing at the Canadian financial system’s robust fundamentals.

However, the pace of this recovery will depend on homeowners not selling their assets, according to TD Economics.

“Absolutely key to our forecasts is the assumption that listings mirror sales by dropping substantially in the near term and recovering gradually thereafter,” said TD economist Rishi Sondhi. “This puts a floor on prices and sustains relatively tight supply-demand balances across most markets, allowing for the resumption of positive price growth as provincial economies are re-opened.”

Copyright © 2020 Key Media

Stress test 2.0? What a 10% minimum down payment requirement would mean for Canadian buyers

Monday, May 25th, 2020

A 10 percent minimum down payment would have a chilling effect on business

Ephraim Vecina
Mortgage Broker News

Canadian Mortgage and Housing Corporation CEO Evan Siddall’s recent address to the Standing Committee on Finance contained a plethora of negative projections, from housing prices falling by 18 percent to one-fifth of all Canadian mortgages being in arrears by September. But it was his comments around the advantages of making 10 percent down payments and CMHC’s attempts to limit demand that have the industry wondering if an increase in the minimum down payment requirement may be in the cards.

As Siddall made his case for the approaching “deferral cliff”, a scenario where unemployed homeowners who have deferred their mortgage payments are asked to start making them again despite not returning to work, he shared with parliamentarians two key pieces of data that associate five percent down payments with increased risk.

The first, a chart that tracks the percentage of loans in deferral by their loan-to-value ratios, showed that 69 percent of the mortgages currently in deferral fall into the 90-95 percent LTV category. The implication seems to be that if there were fewer borrowers putting down five percent, the deferral cliff Siddall described might be less towering.

Siddall singled out first-timers again when he discussed the potential losses they could face if housing prices fall by 10 percent.

“Unless we act, a first-time homebuyer purchasing a $300,000 home with a 5 per cent down payment stands to lose over $45,000 on their $15,000 investment if prices fall by 10 per cent,” Siddall’s statement read. “In comparison, a 10 per cent down payment offers more of a cushion against possible losses.”

Because CMHC will be on the hook for any insurance claims triggered by failing mortgages, Siddall also said the Corporation is evaluating its underwriting policies.

“So if housing affordability is our aim, as surely it must be, then there must be a limit to the demand we help to create, especially when supply isn’t keeping up,” he said.

That’s the same logic that gave Canada its mortgage stress test. Many brokers are worried that a 10 percent minimum down payment would have a similarly chilling effect on business.

“I think it would be a comparison you could draw a lot of parallels to,” says Anthony Venuto of Centum Intouch Mortgage Solutions.

As with the stress test, Venuto feels that any desire for a doubling of the down payment requirement will be driven by the risk associated with lending in Canada’s most expensive markets – Toronto, Vancouver, Montreal, etc. – even though most, if not all, properties in those cities sell for over $500,000, making them ineligible for five percent down payments. It will be the smaller, softer, far more numerous markets where consumers will see their spending power evaporate.

“What about the rest of Canada?” he wonders.

Impact on brokers
Chris Kolinski operates for iSask Mortgage Brokers in Saskatoon. The Bridge City’s real estate market has been soft as warm cheese for the past five years. With homes there appreciating so slowly, buyers often opt for putting five percent down.

“I’d say about 80 percent of the purchases I do are five percent down purchases,” Kolinski says. “It actually comprises a big chunk of the business I do.”

Kolinski is in regular contact with brokers in Alberta and Manitoba. He says minimum down payment deals are a common occurrence.

“If this was to happen, I anticipate a big hit to homebuyers in the prairie provinces for sure,” he says.

John Vo of Spicer Vo Mortgage in Halifax, another market where buyers are regularly able to purchase homes will five percent down, understands the desire of insurers and lenders to protect their assets by requiring higher down payments. But it’s an odd move for institutions that require a high volume of home purchases to keep the wheels spinning and the margins as high as possible.

“They’ll have more quality mortgage holders,” Vo says, but far fewer overall.

With down payments being one of the biggest challenges facing homebuyers, Vo says brokers will be expected to work much harder for their clients if the down payment requirement doubles. It will require a delicate balance: Brokers will have to set hard savings guidelines for their clients if they hope to qualify, but buyers frustrated by their situations may decide to switch brokers if they’re constantly being told something they don’t want to hear.

“We’re going to have to become even more firm with our customers in saying, ‘This is your plan. You really need to stick to it,’” he says.

For Kolinski, an increase in the required down payment is a challenge he’s ready for.

“I’ll adjust the same way I did when they introduced the stress test back in 2016,” he says. “It was a huge panic for me when it happened. But ultimately, it comes down to us as brokers being able to adapt to the market.”

Few in the industry seem to think the change is imminent. Either way, the discussion around down payment levels has shone a harsh light on the anxiety-ridden situation facing first-time buyers.

“We’re hearing more and more that home ownership isn’t a right, it’s a privilege,” says Verico COO Mark Squire. “You feel for those first-time buyers. You’re going to see more pressure on the bank of mom and dad to help out.”

Copyright © 2020 Key Media

Who will buy Vancouver housing in a time of COVID-19?

Saturday, May 23rd, 2020

Metro real estate in for a wake-up call

Douglas Todd
The Vancouver Sun

More condominiums and houses are under construction in Metro Vancouver than ever before.

But who is going to buy them — let alone live in them — in an era mutated by COVID-19? Who will come forward when a global lockdown has pummelled the three key factors that fuel housing demand in Canada?

A record-breaking 44,000 “homes” are being built across Metro Vancouver. Almost 37,000 are condominiums or apartments. Planned years in advance to serve a once-fiery market, their construction has not been stopped by lockdown measures.

Judging by the trend of the last decade, developers of new Metro properties would expect about four in 10 of their dwellings to be snapped up by people who don’t actually live in them — so-called investor-owners, who leave the “homes” vacant or rent them out. (The real-estate market is similarly vulnerable in Toronto, where a record 73,000 units are under construction.)

But who are these houses and condominiums to be sold to at a time when the pandemic is causing double-digit unemployment, has pushed household debt and default into uncharted territory and thrown nerve-wracking unpredictability into population-growth forecasts based mostly on offshore in-migration?

A record 44,000 housing units are being built in Metro Vancouver, plus another 73,000 in Greater Toronto. Source: CMHC / Steve Saretsky

Metro Vancouver and Toronto are not alone, especially among desirable cities, in seeing their real-estate foundations cracked by the novel coronavirus, which has already caused the volume of sales to plummet.

Prices are set to be next. Various analysts have forecast housing values in Great Britain, Australia and the United States to drop by 10 to 20 per cent over the next year or two.

Predictions about the future of Canada’s housing prices are all over the proverbial map, to an almost comical degree (although few are laughing). Stephen Punwasi, of Better Dwelling, has compiled the wildly diverging Canadian housing forecasts of a dozen big-time analysts.

They range from TD Canada Trust and Scotiabank over-optimistically prophesying, at least for public consumption, that prices will rise six to 12 per cent over the next two years. That contrasts with credit agencies such as Moody’s and DBRS Morningstar more quietly predicting they will drop 10 to 30 per cent. The Canada Mortgage and Housing Corporation (CHMC), for its part, is looking at declines of nine to 18 per cent.

Meanwhile, the Canadian Real Estate Association has simply decided to not make its usual quarterly prediction. That leaves Punwasi musing: “CREA’s mom must have told them if they can’t say anything nice, don’t say anything at all.”

Right now, in the havoc-filled short term, it’s prudent to take the forecasts of self-interested mortgage-holding banks far less seriously than the more impartial credit and housing agencies. Their predicted price drops could hurt over-leveraged owner-investors, but end up being good news for working people who have withstood COVID-19 and might be able to buy a first home or move into something better suited to their needs.

It’s grim out there, though. Virtually no one is blind to the first COVID-19 factor set to hammer prices: That it has cost more than three million Canadians their jobs, at least temporarily. The second crisis, of growing household debt, is also clear: CMHC president Evan Siddall said this week that 20 per cent of Canadian mortgages could go into arrears.

When it comes to the third COVID-19 factor threatening housing sales, only a few industry specialists talk about how migration patterns, which are changing dramatically because of the pandemic, will hit housing demand across Canada and especially Toronto and Metro Vancouver (the latter with a population of 2.6 million).

More than four out of five people who have moved into Metro Vancouver (and Toronto) in recent years are foreign-born. Many are immigrants, but an unusually large portion — 35 per cent — are non-permanent residents, such as international students, guest workers and refugees, says B.C. housing analyst Steve Saretsky.

Not only have COVID-19 precautions virtually shut Canada’s borders to newcomers, they’ve led to many of the more than one million international students and guest workers in Canada (about 180,000 in Metro Vancouver) returning to their homelands. That’s hitting housing, especially the rental markets of Vancouver and Toronto, which have the highest immigration rates per capita in North America.

No province in Canada relies more than B.C. on in-migration to expand its population, which creates more demand for housing. Citing data from Capital Economics, Saretsky wrote in his April report: “In B.C. we are particularly vulnerable to a reduction of migration flows. Net immigration was 14 times as large as the net natural increase (ie. net births less deaths) — versus fives times for Canada as a whole.” (See chart.)

One politician paying attention to these many ways COVID-19 is affecting the region’s mammoth housing industry is Vancouver city councillor Colleen Hardwick.

The daughter of the late University of B.C. geographer Walter Hardwick (who also served on Vancouver council) has a motion asking why the city has a housing strategy focused on building far more units that it actually needs.

Hardwick’s motion — set to be debated next week, with supportive presentations by several B.C. housing scholars — says that in light of “post-pandemic realities,” City of Vancouver politicians and staff should be re-examining why it is targeting to build 72,000 new dwellings over the next decade.

The city of Vancouver, population 680,000, has been growing by one per cent a year mainly because of offshore migration, says Hardwick’s motion. At that growth rate, the city really needs only 30,000 new housing units over the next 10 years.

And given that “there’s no question COVID-19 is going to have a major impact on housing” and migration flows, Hardwick said in an interview she wonders why so many officials have been creating a “scarcity narrative” to justify increased zoning densities and intense surges in housing supply.

In order to plan housing effectively, Hardwick is urging city staff to provide better data and a more credible construction target, one that will meet the needs of ordinary people who live and work in the region, not necessarily serve luxury buyers, many of whom spend foreign-sourced capital.

Along with some other savvy municipal politicians in Metro Vancouver’s suburbs, Hardwick is aiming for a more healthy way forward in a region where many developers have for years been erecting dwellings largely to satisfy the desires of owner-investors and speculators.

© 2020 Vancouver Sun

Some business better off staying closed

Friday, May 22nd, 2020

This crisis isn?t over for BC businesses

Western Investor

Some Metro Vancouver businesses could be better off staying closed than risk re-opening during the second phase of the B.C.’s government’s plan to safely and gradually re-open the economy.

“This crisis isn’t over for BC businesses. You can go out of business much faster with a partial or failed reopen than you can a temporary closure,” said Val Litwin, president  and CEO, BC Chamber of Commerce. “Policy-makers must appreciate that business models will be very fragile during this early stage of the recovery cycle and that ongoing supports will be essential.”

Only 26 per cent of businesses impacted by COVID-19 feel able to restart and operate profitably with the gradual easing of restrictions, according to a survey of 1,343 member-businesses of the BC Chamber of Commerce, Greater Vancouver Board of Trade, Business Council of British Columbia, and other partners. 

The survey, conducted with the Mustel Group, was released May 22.

Given the challenges to restarting operations, over half of the members surveyed (55 per cent) expect it will take at least two months to restart. The survey also found that 43 per cent of  businesses expect that they will still require significant and additional financial support or incentives from the provincial and federal government in order to continue operating. 

One of the challenges for business tenants is paying the rent.

The survey found that 26 per cent of commercial tenants were unable to pay their rent in full in April. The primary reason is that they were shut down and had no revenue (75 per cent). Others had no access to the federal Commercial Rental Assistance ( 30 per cent), while 19 per cent said they could not come to terms with their landlord.

In terms of businesses that have closed temporarily, the level is slightly higher in urban markets (50 per cent) than in rural (42 per cent), with the incidence highest in healthcare and social assistance; arts and entertainment; and accommodation and food services, all above 68 per cent.

Among retail establishments, 58 per cent will remain closed, at least temporarily. 

“The survey data shows virtually all respondents continue to experience lost revenue as a result of COVID-19 and restart efforts will be hampered by an inability to attract new and returning customers. We are facing the worst year for B.C.’s economy and job market in a century,” said Greg D’Avignon, president & CEO of the Business Council of British Columbia. He called on governments to “expedite economic activity and address competitiveness barriers in the form of tax, regulatory and process costs that stand in the way of businesses re-hiring the nearly 400,000 employees who’ve lost their jobs.”

Copyright © Western Investor

What if your staff isn’t comfortable working from home?

Thursday, May 21st, 2020

Working from home can create new anxieties

Clayton Jarvis
Mortgage Broker News

Working from home isn’t for everybody. But with the country only gradually reopening and COVID-19 still a threat to both public health and the economy, mortgage companies will be forced to consider keeping their work-from-home structures in place for the foreseeable future.

For brokers used to working from a home office, the last two months have likely meant little change to their day-to-day routines – or those routines’ impact on their families’ lives. But for admin staff, managers, analysts and other employees used to working in an office environment, working from home can create new anxieties that take away from the purported increase in productivity some workers experience after relocating their laptops from the office to the ottoman.

“People have been asked to do more than they’re used to,” says Pivotal Consulting’s Heide Garrigan, referring to the increased burdens of child care, home schooling and even parental care COVID-19 has thrust on millions of Canadian families, “plus they’re working from home. And they’re trying to do it all.”

One of Garrigan’s neighbors in the Denver area provides a telling example. A mother of three, she has a job that allows her to work remotely regularly. But when COVID-19 meant her, her kids and her husband would need to work, study and live together 24 hours a day, it didn’t take long for the pressure to get to her.

“By Friday of that first week, I saw her outside and said, ‘How you doing?’ And she burst into tears,” Garrigan says.

MBN asked Garrigan what mortgage professionals who find working from home more stressful than the office can do to ensure they’re doing their best work for their clients. She identified four areas where small tweaks can reduce the tension.

The myth of being ‘always on’
With no meetings to take someone out of the office, there can be an impression among remote workers that working from home, since everyone at the company knows where you are, means always being available, 9-to-5 be damned.

“This whole expectation that you’re always available to answer calls or texts or IMs or anything like that, I think that’s a challenge for people,” Garrigan says.

She suggests setting office hours – including regular breaks – and actually sticking to them. A productive day in a space designated for work should allow people to be productive enough that they can avoid having to be available all the time.

But Garrigan says mortgage companies have a role to play in creating an environment where employees are trusted enough that they don’t feel as if there’s a potential to disappoint the boss every moment of the day. Such situations allow employees to step away from their instant messages/email/Skype/Slack for a few minutes without worrying that their work ethic may be called into question.

“In an environment where’s there’s trust, people are more likely to not have to be ‘on’ all the time,” Garrigan says. “If you’re always on because you’re trying to prove yourself, that’s stressful.”

Productivity up, positivity down
Humans, social animals that we are, often thrive in communal environments. Working from home may benefit a company by increasing productivity, but the forced seclusion causes many remote workers to feel isolated and disengaged.

“We’re producing, we’re doing great, we’re working, working, working, but the fun has been taken out of it. People aren’t seeing each other,” says Garrigan.

She says remote workers who no longer have commutes to slog through should take advantage of the time they’re saving. Rather than dedicating those minutes to doing more work – how many MBN readers have only worked 8-hour days since COVID-19 sent them home? – employees should be filling that time by doing something for themselves, like exercising or taking a class; activities that have the added benefit of a community component (when social distancing allows for it), which can alleviate those feelings of isolation.

Quieting the chatter
Part of the challenge of providing an engaging remote working environment is when a potential solution to one problem becomes a problem in itself.

HR directors and office managers are doing their best to keep their workers connected. But ongoing Slack, Skype and other instant message chats can be highly distracting, particularly if an employee feels pressure to always be available.

“I have had a few people who said that at least when they’re in the office they can put their headphones on and people know not to bother that person,” Garrison says. “Or they can go to an empty conference room.” That’s less of an option when workers have to hear a “ding” every time one of their colleagues types “OMG! So cuuuuute!” into a Skype thread about dogs.

“Turn it off,” Garrigan says. “Does your boss know your cell phone number? Does your boss know your email? Believe me, your boss can reach you.”

She also urges companies to set up separate chats – one for relevant, work-related messages and one for random, non-work topics – which will allow employees the choice of following along with their co-workers’ chitchat at their leisure or ignoring it completely.

Lack of one-on-one feedback
“When you’re sitting in a meeting, you know if an idea came across well, or if your boss is happy or if you’re being heard,” Garrigan explains. “All of that is lost when it’s just phone or text or instant message or email.”

People thrive when they’re acknowledged, and they learn better when they can be guided through their mistakes with someone whose body language and tone they can read. Providing feedback through text, even when it’s positive, doesn’t carry the same weight. If you did a good job walking a client through a recent change to the loan application process, what would you rather receive: a smiley-face emoji or an actual smile?

Using video to provide feedback, even if it’s a brief “Way to go!” can work wonders. It’s more natural and allows workers to see the impact their efforts have had on their employers’ emotions, a nuance that is often lost when feedback is given in text.

Garrigan says companies need to consciously set aside time for providing feedback to their remote workers, whether it be a one-on-one conversation or a team chat. “It isn’t a status meeting,” she stresses, “it’s a feedback meeting.” For companies whose employees are stretched for time, feedback can also take up the first few or last few minutes of a regular status meeting.

Working from home may be the new normal, but it will take continued effort on the part of brokers, administrators and the companies they work for to ensure it feels that way.

Copyright © 2020 Key Media

Virtual home staging thrives during pandemic

Wednesday, May 20th, 2020

Virtual staging has blossomed during the pandemic

Diane Slawych

Every industry has been affected by COVID-19 in one way or another. And while the fallout has mostly been negative, one niche business that has experienced a positive impact is that of virtual staging.

For Young Kim, founder of Vancouver-based Bella Staging, business had been ramping up before COVID-19, but then it got even busier, prompting him to add four new designers to his team of 11.

Unlike conventional staging, in which the contents of a home are removed and replaced with attractive rented furniture and décor to help improve a home’s sale price, virtual staging is done on a computer. It uses a combination of photography, 3D modeling software, Photoshop and renderings, to produce images of spruced-up rooms and achieve a similar result.

The advantages of virtual staging are that it costs considerably less, and, in this time of social distancing, property owners can still show their home in the best light without having movers carrying furniture in and out of their homes in the midst of a pandemic.

Kim believes social distancing could be one reason why business is growing. “I think people know about virtual staging but haven’t been inclined to use it,” he says. “A lot of Realtors are traditional and not adopting new technology but this has forced them to try it out and say this is pretty good, instead of conventional staging.”

A self-described techie nerd with a background in web development and a “keen” interest in real estate, Kim came across virtual staging a few years back and believed his designers could do a better job and make the photos look more realistic.

He was pleased with the results and asked local Realtors in Vancouver to send them photos of empty units in order to test the market. “People liked what we did and looking at the competition, their pricing was high. It was a good time to get in the market. We could streamline the operation to keep prices low and provide good quality photos.”

The process is fairly simple. A client – they include Realtors, developers and builders – submits one or more photos (the average is about three to five) of a room or rooms they would like to have staged. For optimal results, Kim says the submitted photos should be professionally shot and have a minimum resolution of 3,000 x 2,000 pixels. The company charges about $22 US (or roughly $29 CDN) per photo.

The staged images are sent back to the client, who may request further edits or revisions at no extra charge. Normally clients can get the final images in one to two days, though with the increased demand lately Kim says it now takes about two to three days.

The company offers three main types of services. With virtual staging, the client sends photos of empty rooms and their designers fill it with beautiful furniture to make them more attractive on MLS and social media and any other marketing materials they have.

A second type is virtual furniture removal and staging, which is often sought in cases of tenanted apartments/homes or properties with furniture in them that can’t be removed. The company will remove the existing furniture using Photoshop and replace it with more modern pieces. A third service is virtual renovation, which Kim says works best for properties that will likely be reno jobs. They can show what the home would look like with new flooring and appliances, or by adding a hot tub on the patio, for example.

It’s been three years since the company began offering virtual staging services, initially starting in the much larger U.S. market (hence its U.S. dollar pricing) where it still gets fully 70 per cent of its business.

Domestically, the company receives about 50 to 70 photos a day from clients across Canada. “COVID has exponentially increased the number of orders we’re taking on a daily basis,” says Kim, who adds that a lot of people have learned about virtual staging through word of mouth or by attending the company’s presentations to brokerages.

“We started our marketing efforts in Canada last year and so far it’s been great,” he says.

“People realize instead of spending $20,000 to stage a home, they can spend $100 and get good results.”

© 1989-2020 REM Real Estate Magazine

How the pandemic will reshape the rental market

Tuesday, May 19th, 2020

Post-COVID-19 could bring about some changes

Paul Danison

How long has it been since we began hearing these words every day: COVID-19, coronavirus, pandemic? How long before we try to forget them?

Who knows – it could be awhile. But the new words will probably change us – change the way we live, play and work, and will possibly bring a more massive digital transformation closer to home sooner than predicted.

Take housing, renting, and all that’s associated with the search, the transactions and the move. Post-COVID-19 could bring about some changes to enhance the process, making it more efficient, easier and maybe even more enjoyable.

People are searching for rentals again, says Matt Danison, CEO of “ has experienced its all-time high in traffic numbers in the first week of May, surging 59 per cent compared to the first week of April,” he says. “Renters who put off moving when the pandemic hit are now starting to resume their apartment search in the hopes that Canada’s lockdown will end in the coming weeks.”

Guy Tsror, data scientist at Local Logic in Montreal, agrees.

“At its worst point since COVID-19, the rental market lost 27 per cent of user search traffic across Canada,” he says. “But since that low point in mid-March, the market has rebounded with the search traffic for the last two weeks of April exceeding the last two weeks of January.

“People still need homes, and we see that the initial shock of COVID-19 has subsided, and consumers are back out there looking for homes online.”

Local Logic looked at how users interact with its proprietary Location Scores to understand what matters to renters now, compared to pre-pandemic days.

Unsurprisingly, people in Canada looking to rent care about proximity to grocery stores much more than before the outbreak – 13.5 per cent increase compared to January averages.

The graphic shows renters care much less about public transit (a 14-per-cent drop), and they are much more interested now in cycling (a 17.3-per-cent increase).

“Since COVID-19, renters’ lifestyle demands have changed and have not rebounded to pre-COVID times; we see renters are looking to live in more cycling- and pedestrian-friendly areas, with better access to groceries and better access to schools,” says Vincent-Charles Hodder, CEO of Local Logic. “Conversely, renters care less about being close to quality retail shopping, public transit, daycare and quiet neighbourhoods.

“Only time will tell if this is a permanent change in lifestyle demand or if this will begin returning to normal as non-essential businesses reopen and consumer confidence returns.” put together seven predictions – digital and otherwise – that might stick long after the coronavirus is gone to reshape the housing/rental market.

1) More landlords and renters will embrace online virtual leasing, 3-D and virtual tours.

It’s not like 3-D and virtual tours are something new; they just have not been commonly used. More tenants will begin paying rent digitally than ever before.

2) Some short-term rentals in urban areas will convert to long-term rentals.

The longer short-term rentals in the larger cities remain vacant, the sooner their owners could put them back into long-term rental stock. Or, they might have to put the units on the market if they can’t afford the mortgages. This could give renters more options, help open up supply a little in cities such as Toronto, Vancouver and Halifax with tight vacancy rates, and might even help to lower rents. But the biggest short-term problem for short-term rentals are new laws prohibiting them in some jurisdictions.

3) Cleaning will take on a whole new meaning in apartment buildings.

Cleaning will become a bigger industry with stricter rules or guidelines on how to clean, what to use and how to stay safe while cleaning. Janitors and cleaners already wear gloves, but now they will probably don masks, coveralls that are washed every night and use spray bottles of disinfectants known to kill the coronavirus. The rags, brushes and equipment used to clean will need to be cleaned and disinfected or trashed.

Cleaners might be trained better for the coronavirus, and they could get a temperature check before coming to work each day. This will become a more expensive task for landlords and property managers.

4) More claims will flood tenant/landlord boards.

The renting landscape in the shadow of COVID-19 is confusing and chaotic and things could get worse unless cooler heads prevail.

Rent strikes were planned for April and May, evictions are banned, rent hikes are frozen, job losses are mounting, government assistance is on the way – soon they say.

Once the coronavirus war ends, the landlord/tenant war could escalate and play out in tenant/landlord board hearings and maybe even in more litigation. Tenant/landlord tribunals are already overloaded and backlogged; this could get worse post-COVID-19.

5) People will not move as much in the short term but expect a spike in the recovery.

When the worst is over, moving vans will start rolling again as optimism gets us moving again. Most moves will only be delayed during this bleak time. While more renters will be on the move, count on fewer homeowners making a move.

6) Rents could fall in the short term, and affordable housing will be even harder to find.

Imagine if you can, Toronto and Vancouver with a healthy three per cent vacancy rate, and rents falling by the end of the year rather than rising. A few months ago that would have been laughable. But because of COVID-19, Canada will have less immigration, fewer international students and with the border closed, not nearly as many seasonal and part-time workers. All typically are renters.

And, because of No. 2 above, some-short rentals will be converted to add to the rental supply.

So, with fewer renters and more supply, rents could slide down overall this year, but the higher end of the rental market advertised as luxury rentals could be more affected.

“With the record number of layoffs, there will be more demand than ever for affordable housing,” says Danison. Also, in some areas, building affordable housing has slowed or even been halted for a while.

7) Coworking spaces in apartment complexes could become the hottest new amenity.

Working remotely is not new. Many in the gig economy know nothing of office politics. And, coworking spaces were becoming popular in new apartment complexes before COVID-19 hit.

A few other trends to consider post-COVID-19:

  • A new way of living for seniors. Senior housing, buildings and units could be redesigned with new protocols on how to better protect them. More seniors die from this virus than any other age group, so a lot of thought will be given to how to protect them. This will be an evolving, creative process of how we protect the older among us.
  • The dream of buying becomes more of a dream. The nightmare of COVID-19 could extend the trend of renters staying renters longer.
  • With vastly increased food delivery, will apartments have a designated area for the exchange of food and goods between delivery services and tenants? Not a bad idea.
  • Will international students be caught in a pickle of looming deadlines to leave their residences and the dwindling number of international flights? What will they do, caught in between school and going home?

One last point: Character, creativity and community are often developed out of adversity. Think back to the 2008 “Great” recession or even to 1929 Great Depression.

Entrepreneurs and creative companies will come together with innovative solutions to the housing crisis stemming from the 2020 COVID-19 pandemic. Count on it.

© 1989-2020 REM Real Estate Magazine

Conservative MPs urge feds to eliminate First-Time Homebuyer Incentive

Friday, May 15th, 2020

First-Time Homebuyer Incentive inadequate

Clayton Jarvis
Mortgage Broker News

On May 12, two Conservative MPs addressed their concerns over the federal First-Time Homebuyer Incentive in an open letter addressed to Canada Mortgage and Housing Corporation CEO Evan Siddal and Minister of Families, Children and Social Development, Ahmed Hussen.

The letter’s authors, Tom Kmiec and Stephanie Kusie, both from Calgary, criticize the program’s cost and its failure to capture the interest of consumers. Kmiec was highly sceptical of Liberal projections, released in May 2019, that saw 100,000 Canadians eventually leveraging the shared-equity program. The CMHC’s annual report for 2019, published earlier this week, found that only 2,950 Canadians were approved for a shared-equity mortgage through the FTHI.

“[T]hese 2,950 approvals are a far cry from the target of 20,000 that CMHC had set for the program’s first six months of operation,” the letter reads. “Indeed, it seems that the program has been a complete failure and any notion that it will come close to assisting 100,000 aspiring homeowners is now scuttled.”

The FTHI has been a constant target for Kmiec, who debated the program in the House of Commons with Siddal in May 2019. He has gone after it in multiple Facebook posts dating back to April 2019.

“I knew that the Liberals’ shared equity mortgage scheme was doomed to fail because the vast majority of Canadians don’t want to co-own their home with the federal government,” Kmiec told MBN by email. “More importantly, gambling on the real estate market with taxpayer dollars through the purchase of equity shares in Canadians’ homes is not an appropriate role for government.”

Kmiec is also concerned that the program, along with the CMHC’s commitment to purchase $150 billion in mortgage-backed securities from Canadian lenders, exposes taxpayers to the risks associated with insuring that level of mortgage credit. He says the measures taken over the past decade to reduce CMHC’s liabilities have been undone.

“These measures will have a significant impact on our county’s finances for decades to come,” Kmiec writes. “Now is the time for the government to be eliminating wasteful programs, such as this First Time Homebuyer Incentive, to help limit the devastation the pandemic will have on our economic health.”

 In his comments to MBN, Kmiec explains that the FTHI “does nothing to help” first-time buyers qualify for a mortgage that wouldn’t otherwise be approved. Because one of the conditions for the program is that a borrower must qualify under the existing down payment and underwriting criteria, he says the almost 3,000 people who signed up for the program “would have all been able to qualify for a mortgage and purchase a home without the FTHI. The only appeal of the program to these 3,000 individuals would be the slight reduction in the monthly mortgage payments, which will end up costing them a significant share of the equity in their home when it is time to sell.”

The equity component of the program may indeed be the sticking point for many Canadians, says Streetwise Mortgages’ Dalia Barsoum, who compares the program, rather unfavourably, to mortgage deferrals.

“There are downsides,” she says, particularly for homeowners having to pay back amounts far beyond what they originally borrowed to get into the housing market. Owners in rapidly appreciating markets like Toronto or Montreal could, in twenty years’ time, possess properties that have doubled in value. Based on CMHC’s own figures, it’s clear that few Canadians are excited by the prospect of cutting the government a cheque for five percent of those gains.

But Barsoum thinks cancelling the FTHI is short-sighted.

“They shouldn’t eliminate it,” she says. “It’s not for everybody, but there are people who will benefit them who have no other options.”

Kmiec’s attacks on the First-Time Homebuyers Incentive all have one thing in common: they come with no proposed alternatives. MBN asked the MP to provide his own ideas for helping first-timers, specifically urging him to go further than pointing out the obvious fact that supply needs to increase. The response received may underwhelm most readers.

“We can expect that the COVID-19 pandemic and the subsequent government-enforced shutdown of the economy will lower real estate prices across the country. We can also expect to see continuing record-low interest rates as the economy enters into recovery. Now is not the time for anymore sweetener from the taxpayer. The federal government should work with provincial governments to reduce barriers and red tape to residential construction that are impeding new housing construction stock across the country.”

Changes to the program do not appear imminent.

“Now is not the time to cut support for Canadians,” Jessica Eritou, spokesperson for the Office of the Minister of Families, Children and Social Development, said in a statement to MBN. “It is especially important to invest in programs that put home ownership within reach of more middle-class families.  We will continue building on our historic commitments to giving more Canadians a safe and affordable place to call home.”

Copyright © 2020 Key Media

COVID-19 will create new real estate winners

Friday, May 15th, 2020

A shift to work from home helps to improve productivity

Conor Sen

The coronavirus is going to change the way we work whether we like it or not — at least for the short term and maybe longer.

To take just one example: Twitter said it would let employees work from home even after the Covid-19 crisis has passed. Although it’s too early to say how much of a lasting change in work culture we’ll get, even a temporary shift such as this should be great news for residential real estate in at least two types of communities: the exurbs of high-cost coastal cities and second-tier cities with similar amenities but more limited job markets than their larger coastal peers.

A shift to work from home helps to lift the constraint of physical proximity for workers with certain kinds of jobs, allowing them to consider a wider range of places to live than when they had to be in the office five days a week. This has benefits both at the individual and the collective level. In a region such as the San Francisco Bay Area, with lots of tech jobs but expensive and limited housing, the average commute time is 32 minutes. If a person there worked from home one day a week, that’s an hour a week not spent commuting. If these practices are adopted by most white-collar employers, that would take a lot of vehicles off the road during peak commuting times, reducing congestion and shortening drive times for everyone else.

Reduced commuting and less traffic in a region makes living in the exurbs more appealing than it otherwise might. Workers can get more house for their money without having to make the sacrifice of long daily commutes. In a corporate culture where working from home is standard, it might also mean housing preferences change. A home office, or a “Zoom room,” might become as standard in the exurbs as a two-car garage.

Some companies might take this even further and embrace large-scale remote work, allowing employees to live anywhere that has a fast internet connection. The biggest beneficiaries here will probably be metro areas with similar cultures and amenities as the higher-cost coastal regions people are leaving, but have lower housing costs. John Burns Real Estate Consulting has been highlighting shifts in the strength of various housing markets since the onset of the crisis and it has identified the five best housing markets at the moment as Salt Lake City; Austin, Texas; Nashville, Tennessee; Raleigh, North Carolina; and Tampa, Florida. That list could grow depending upon how powerful the dispersion trend becomes as the economy recovers, extending to additional midsize metro areas in the South and West.

If there’s a loser here, it’s the real estate and businesses whose value stems from proximity to the job centers in pricey metro areas. Dry cleaners, lunch spots and bars close to offices will suffer if there are fewer workers in the area. Prices for housing, particularly older, lower-quality housing, that’s close to offices may decline as well. Commercial office valuations may also fall if companies reduce the amount of space they lease. Recessions and downturns are always a chance for companies and individuals to cut costs where they can. If remote work is as productive as in-office work, it gives companies the chance to save money on office space and possibly on labor (provided they will be able to pay workers less to live somewhere cheaper).

A large scale adoption of this trend could both reduce geographic inequality and fuel economic growth. So many of the fruits of economic growth during the past generation have gone to knowledge workers in cities such as New York and San Francisco. But because the housing stock in both cities is relatively limited, much of the increase in wealth in those areas has gone to the owners of real estate. This has led to soaring rents for residents, negating the broad-based spillover effects that should have benefited the rest of the community from all that wealth creation.

But if higher-paid knowledge workers are able to move to places with lower housing costs, there will be money left over that isn’t going to paying the rent or mortgage. It means more money can be spent on dining, travel, leisure and other labor-intensive local services. And it means that economic growth won’t be as concentrated in coastal metros, spreading the wealth to the rest of the country. The growing concentration of wealth in coastal metros has seemed unsustainable for a while. Perhaps a shift in corporate culture that embraces work from home is just the catalyst we needed to break the pattern and bring about a more sustainable and equitable model of economic growth. 

Copyright Bloomberg News

Redfin co-founder sues company

Friday, May 15th, 2020

Violated patents basis of law suit

Ryan Smith

Online real estate brokerage is being sued by one of its own co-founders, who says the company has violated his patents for years.

Redfin co-founder David Eraker is suing the company, claiming that its alleged violations of his patents has cost him millions of dollars, according to an Inman report.

After leaving Redfin, Eraker formed Surefield, an online brokerage that pioneered 3D home-tour technology, Inman reported. Eraker claims that Redfin and partner Matterport copied Surefield’s technology, according to a lawsuit filed in federal court.

Another lawsuit, filed in Washington state court, claims that Redfin, along with investor Madrona Venture Group, misappropriated map-based search technology invented by Eraker while he was still at Redfin, Inman reported.

Both suits ask for monetary damage, and the federal suit asks that Redfin be prohibited from using technology based on Eraker’s patents, Inman reported.

According to the lawsuits, Eraker founded Redfin in 2002 and was later joined by Michael Dougherty and David Selinger. The lawsuits state that within two years of its founding, Redfin was “the first and only company” to combine data types including satellite imagery, data from county assessors’ offices, and data from multiple listing services.

Redfin was able to combine this data thanks to technology Eraker developed, according to the lawsuits. Several patents from the period are under Eraker’s name, Inman reported.

But as Redfin was preparing for a Series A funding round in 2005, Madrona managing director allegedly discovered technology that Eraker had developed while at Redfin, Inman reported. The Washington state lawsuit claims that Goodrich filed a provisional patent for the technology, concealing that patent from Eriaker. Goodrich assigned the patent from Redfin “only after Mr. Eraker had been ousted from the company,” the state lawsuit said.

The suit called the move “fraudulent behavior” that “resulted in Mr. Eraker losing millions of dollars in equity.”

The federal lawsuit concerns technology developed after Eraker founded Surefield in 2012, Inman reported. The suit claims that Surefield was the first company to offer “commercial image-based rendering” to create 3D home tours “that combined photorealism and spatial navigation amongst other features.” Surefield launched the technology – which is now common in the real estate industry – in 2014, according to the Inman report. Surefield holds several patents related to the technology, naming Eraker as its inventor.

Eraker’s lawsuit claims that shortly after Surefield launched its 3d tour tech, Redfin and Matterport launched their own version – which Eraker claims was stolen from him.

“The visual presentation and underlying technology were copied from Surefield’s first-to-market service,” the lawsuit said.

Nearly three years ago, right before Redfin’s initial public stock offering, Eraker sent a letter to the company threatening legal action over patent violations, according to Inman. Redfin said at the time that the claim was meritless.

Copyright © 2020 Key Media Pty Ltd