If Canadians want a case study on how governments make a problem worse, cast an eye at British Columbia and housing. The provincial government, both under the previous Liberals and now the NDP, have continually kept or enacted policy, such as rent control and now a speculation tax, that exacerbates a tight rental market and high real estate prices.

Supply problems and slum promotion: The problem of rent control

British Columbia has long had rent control. That policy always discourages the construction of rental units as it limits the return on investment, which, in turn, squeezes supply, even condominiums bought by potential individual landlords. Such controls also produce slums as landlords have little incentive to fix up or improve units beyond the bare legal minimum. This ultimately harms renters by producing artificial shortages and a degraded housing stock.


In addition to that problem, while rent control acts to limit price increases on the upside, it also has an anti-market effect that prevents prices from falling dramatically on the downside.  Consider Alberta, where rental prices have come down since the 2014 oil price crash, and relative bargains can be had. The price drops would be more modest if rental prices had been controlled.


Consider that this position—rent control is negative—is taken even by economists who would not categorize themselves as “free market” but warn about its horrific effects on the housing market. Nobel Prize winner Gunnar Myrdal, active and instrumental in left-wing political parties in Sweden in the twentieth century, often pointed out rent control was counter-productive policy. Another left-wing Swedish economist Assar Lindbeck concurred. Lindbeck once famously said“In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing it.”

From bombed-out rent control to the speculation tax

Rent control is bad enough on its own. Now British Columbia plans to add to the collateral housing damage with its new “speculation tax”, announced in the recent provincial budget. As of 2019, the new tax will amount to a two-per-cent property tax on secondary homes. The aim is to tax speculation and also homes that might sit empty for part of the year— e.g., a summer vacation home —to try and force them into the rental market.


Here is problem number one: Imagine a retired couple where the carpenter-grandfather built a cottage years ago and where the entire family visits every summer. Maybe the couple rent out the home for part of the year to garner some retirement income. Assume the cottage and property is worth $300,000. That two-per-cent tax means in addition to property tax—perhaps $2,000 already, another $6,000 in tax will be applied courtesy of the B.C. government’s new speculation tax. Effectively, the province just quadrupled the existing property tax bill to $8,000.


B.C. Finance Minister Carole James recently promised the new tax will not apply to British Columbians who own such vacation homes. On the contrary, so far it is clear they too will be caught in this new tax net, at least initially. The interpretation bulletin from the B.C. Ministry of Finance notes B.C. owners will first be forced to pay the tax and then, if their property qualifies, receive a refund from the provincial portion of their income taxes paid—a year later. “A non-refundable income tax credit will help offset the tax for B.C. residents” if how the Ministry of Finance bulletin reads.


Now, problem number two: Note the “offset” language. That implies something less than a full refund, never mind waiting for a year after paying the extra $6,000 property speculation tax. And problem three: What if an elderly couple on a limited income pay little or no provincial income tax? They are out of luck because there is nothing paid in provincial income tax to offset the provincial speculation property tax.


Even if B.C. tries to re-jig the initial proposal to not tax-nail British Columbians—evidence by the way, of tax policy made up in the NDP’s ideological kitchen and not processed through sensible economists—other Canadians (and foreigners) will be hit by the new quadruple-your-property-tax tax.  And here’s where the new speculation tax is as dumb as the proverbial post.

How B.C. will kill off lower-priced rental construction

Part of the safety valve for renters in British Columbia is the existence of individually-owned condominiums where out-of-province buyers plunk down a down payment and rent it out in the hopes that one day they will themselves move to beautiful British Columbia. (I understand the desire: I was born and raised in Kelowna; it and much of British Columbia is the nearest thing to paradise.)


The Ministry of Finance notes that “qualifying long-term rentals” will be exempt from the new quadrupled property tax but that leaves a lot of ambiguity.


For one thing, if BC residents will see the speculation tax only partly “offset” from BC income tax paid, it seems highly unlikely other Canadians and foreigners will get anything like a full exemption from the tax. Or even a partial one if their property fails to qualify as a “long-term rental”.


That’s counter-productive:  A non-British Columbian may care to vacation in their unit in the summer and rent it out to students for other parts of the year. That adds to the rental pool for a demographic that needs cheaper housing. But it is not clear yet that such partial summer vacation rentals will qualify. At this point, given the ideological proclivities of the BC NDP, I’d bet they won’t.


So, if condominium owners live out of province or out of country, it means at worst, they will pay the full “speculation” tax given there is no BC income tax to be refunded. On a $300,000 property, they’re stuck with $6,000 in extra tax.  And that’s on the $300,000 low-price condominium example. Double or triple the condominium value and the extra tax bill will be $12,000 and $18,000 every year in addition to normal property tax.

Official B.C. NDP policy: Only the wealthy need invest in British Columbia

Ironically, by making it more difficult to own property in British Columbia and rent it out part time, the British Columbia government is creating a problem for everyone except the very rich (who can afford an extra $6,000, $12,000 or $18,000 every year). The B.C. government may find the only people who will risk being caught in the combined thicket of B.C.’s rent control laws and new speculation tax net are the wealthy. After all, it is they who can endure the B.C. government’s class warfare-inspired speculation tax, not Canadians of more modest means.


If that scenario unfolds, then the luxury condominium market may do just fine in British Columbia in coming years. But the market for lower and middle-income rental properties bought by out-of-province investors will collapse given the uncertainty and the existing restrictions on making a return. It’s as if their investment money was illicit Russian or Chinese mob cash.



Source: http://www.macleans.ca/economy/realestateeconomy/b-c-s-real-estate-speculation-tax-will-reserve-homes-for-the-ultra-rich/

Read full post


Canadian home sales fell 16.9 per cent in February, while the national average sale price dropped five per cent, compared to a year earlier.


New monthly numbers from the Canadian Real Estate Association also show that national home sales declined 6.5 per cent from January to February, the second consecutive monthly decline and the lowest reading in nearly five years. Sales were down in almost three quarters of all local housing markets, but there were large monthly drops in the Greater Vancouver and Greater Toronto areas, CREA says.


These declines confirm that many homebuyers moved their purchase decisions forward to late 2017, in a bid to secure mortgages before tighter lending rules took effect in January, said Gregory Klump, CREA’s chief economist.


Other factors, though, are contributing to slowdown, Robert Kavcic, senior economist at BMO Capital Markets wrote in a research note shortly after the release.


“The housing market is more broadly adjusting to stricter mortgage rules, Bank of Canada rate hikes, some provincial policy moves and broken speculative psychology around Southern Ontario,” he wrote.


The national average house price for homes sold in February 2018 was just over $494,000, down five per cent from a year earlier. But excluding Toronto and Vancouver, the country’s most active and most expensive markets, the national average price was just under $382,000, up 3.3 per cent from $369,728 a year ago.


Source: https://globalnews.ca/news/4085106/canada-home-prices-sales-february-2018-crea/

Read full post


VANCOUVER — A foreign buyers tax will do little to cool the British Columbia housing markets where it’s been expanded, as international purchasers make up only a small percentage of sales and lack of supply is the bigger problem, real estate groups say.


Metro Vancouver has had a 15 per cent tax on foreign home purchasers since 2016. The province announced Tuesday it would hike the levy to 20 per cent and impose it in the Victoria and Nanaimo areas, as well as the Fraser Valley and central Okanagan.


The changes took effect Wednesday, catching some industry groups off guard.


“I don’t know anybody who was thinking we needed this tax,” said Tanis Read, president of the Okanagan Mainline

Real Estate Board. “I’m very troubled by the lack of consultation.”


Foreign transactions made up 1.8 per cent of purchases in the central Okanagan, 1.4 per cent in the Fraser Valley, 4.3 per cent in the Victoria area and 4.4 per cent in the Nanaimo area, provincial data compiled by the B.C. Real Estate Association shows.


Read said prices in the Okanagan have steadily risen due to population growth and declining inventory, not foreign buyers. People from Vancouver are moving to the region to escape high housing costs and enjoy a more relaxed lifestyle, she added.


She said the tax might have a “modest” impact but she’s concerned about ripple effects. She has European clients who are planning to move to the Okanagan and the tax has reduced their budget to $600,000 from $800,000, she said.


“That puts pressure on lower-priced homes,” she said. “There are so many unintended consequences, and if they had actually consulted with industry as a trusted partner, instead of as an adversary, then we would have had more concrete solutions.”


Don McClintock, president of the Vancouver Island Real Estate Board, said he’d heard talk of the tax being extended to buyers in Victoria but he was surprised to see the Nanaimo Regional District included.


There’s a “light sprinkling” of foreign buyers in the area his board covers, which includes Nanaimo, he said.


“It’s not a major part of our market by any means,” he said. “So I don’t think it’ll have any negative effect on our sales or even any significant effect on control of prices.”


McClintock said a shortage of listings has gradually driven prices up in the area, with a 15 to 19 per cent spike last year. Provincial and municipal governments should focus on increasing supply, rather than controlling who the buyers are, he said.


The government has committed $6 billion to deliver 114,000 affordable homes over the next decade, and has created a new office within the government agency BC Housing to partner with non-profits and developers on housing projects.


Finance Minister Carole James said during her budget speech on Tuesday that foreign buyers should contribute more for the high quality of life they enjoy in B.C.


“Increasing the tax should help to deter those speculating in B.C.’s housing market,” she said. “Extending it to other communities ensures that we don’t simply push the speculation into neighbouring markets.”


The previous Liberal government also gave little warning before it imposed the tax in Metro Vancouver in August 2016. Sales had already been declining that year, and the slide continued for a few months after the tax before rebounding.


The benchmark price of a detached home in the Vancouver area in July 2016 was $1.58 million. By January 2017, the trough of the market, it was $1.48 million. But it steadily climbed back and now it sits at $1.6 million.


Cameron Muir, chief economist of the B.C. Real Estate Association, said the temporary cooling effect was magnified by local buyers who held back to see how the tax would impact prices.


It’s fine if the government wants to collect more tax from foreign buyers, but it won’t make homes more affordable, he said.


“Foreign buyers are just such a small part of the marketplace that there’s really no difference on the affordability side.”





Read full post


Subject removal is an important process during the real estate transaction that you need to be well versed in to ensure that you are safe and protected when purchasing a home. If you’re looking to learn more about subject removal, this article will go through frequently asked questions to make sure you’re fully prepared to write an offer safely.

What is Subject Removal?

Subject removal is a period of time in which the buyer works to satisfy the conditions, also known as subjects, that are listed on the accepted offer for a particular property. Subject removal works as a great safety net for buyers as it allows the buyer to perform their due diligence related to the subjects that were accepted, such as reviewing strata documents or the title search for the property. If the buyer is satisfied and approves all subjects listed, then they would proceed to “remove subjects” and hand in the deposit so that the deal can now become firm. These subjects are listed in the terms and conditions section of the contract of purchase and sale, and must be agreed to by both the seller and the buyer.

What Type of Subjects Are There?

The most common subjects that you’ll see are:

• Subject to obtaining satisfactory financing

• Subject to receiving and approving a property disclosure statement

• Subject to receiving and approving an inspection report

• Subject to receiving and approving a title search

• Subject to receiving and approving all strata documents (if strata unit)

The above subjects are written in plain form, and will be written in much greater detail on a contract of purchase and sale. For example, a proper financing subject will list the interest rate, term, and amortization that must be obtained in order to proceed with removing the financing clause.

Furthermore, while the above subjects are the most common that you will see written or accepted, an offer can be subject to anything that you need to feel comfortable committing to the property. An example of an uncommon subject would be receiving the last six months of utility bills, or subject to the sale of your current home.

Typically, the hotter the real estate market, the fewer subjects a seller will be willing to accept, and in a very hot market the seller may try to negotiate for a subject-free offer. To make your offer more appealing, you may want to attempt to satisfy the above subjects prior to writing an offer so that you can show the seller that you are actively trying to remove subjects in advance. For example, you can read the property disclosure statement and title search beforehand and state that you are satisfied with those documents and therefore do not have to list them as a subject on the contract. In a very hot market, many buyers also spend money on pre-offer inspections to make themselves more competitive in a bidding war.

How Long is Subject Removal?

A typical subject removal period is seven days long and allows you to organize all your affairs and complete your due diligence to meet the subjects that you have listed on your initial offer. However, there are also subject-free offers, two-day subject removals, two-week subject removals, or others, as the amount of time varies greatly depending on each situation. The amount of time that you offer to complete subject removal depends on a variety of factors, such as how hot the real estate market is in your area, and how many offers you are competing with.

Keep in mind that time is not your friend with subject removal, and the banks, inspectors, and/or property management companies likely aren’t open on weekend or stat holidays. If you are thinking of shortening your subject removal period because you’re in a multiple-offer scenario and are trying to make your offer more appealing, make sure to consider all the external factors and people that you will rely on to satisfy your conditions. If you’re not in a multiple-offer scenario, then try to negotiate for a longer subject removal date, even if it’s by a day or two, to avoid the risk of not being able to remove subjects and the whole deal collapsing.

What If I Don’t Remove Subjects?

Will you lose money if you go through the whole process and end up not removing subjects – either because you can’t or decide not to? The answer depends on how the contract is written and when the deposit is due. Typically, if there is a subject removal period then the deposit will be due within 24 hours of removing all subjects, or upon subject removal. This means that if you decide not to remove subjects because one or more subjects could not be satisfied, then you would not lose any money as the deposit has not yet been handed in. Again, in the typical scenario the deposit is only due if you approve and choose to remove subjects. The deposit is then due, and the deal then becomes “firm.”

In Greater Vancouver, the deposit is usually 5% of the purchase price and will be held in trust by the buyer’s agent’s brokerage. This deposit will then form a part of your down payment, and the purpose of it is to work as collateral to compensate the seller in the case that the buyer does not complete the deal.

How Does the Process Work?

Here is a typical example of how it might go: 

Monday:You put in an offer with your buyer’s agent and it is accepted. Your offer is subject to financing, subject to inspection, subject to receiving and approving the title search, and subject to receiving and approving the property disclosure statement. The subject removal date is in one week’s time.

Monday until following Monday: Begin working to remove all subjects. You hire and schedule a home inspector to come by at least two days before the date of subject removal. You also notify your bank that you have an accepted offer and have them begin the official financing approval process. Your agent obtains all documents, including the title search and property disclosure statement, for you both to begin reviewing. You also follow up on any questions or concerns you may have with the listing agent.

Subject removal date:You have two options:

Remove the subjects, and hand in your deposit of the purchase price. The deal is now firm.

You do not remove subjects because you do not approve of one or more of the subjects and the deal collapses (i.e. you weren’t satisfied with the inspection report). If you do not remove subjects, you do not need to pay the 5% deposit.

Can I Get an Extension?

You can ask for an extension, but that doesn’t mean that it’s guaranteed that the seller will grant you one. In order to extend a deal, the seller(s) and buyer(s) both have to sign an addendum to the contract stating that they agree to extend the subject removal date, along with the new date specified. As a buyer, if you ask for an extension then the seller can reject your request to extend, modify the extension date, possibly request compensation for the extension, or approve the extension as is.

If the buyer and seller cannot come to an agreement with regards to an extension, then the buyer has the option to either remove subjects as is, or not remove subjects and collapse the deal.






Read full post


Getting into the world of real estate investment can be highly lucrative. Real estate has produced many of the world’s wealthiest people. If you are just starting out in your career as real estate tycoon, there are some things you need to consider.

First and foremost, it is important to consider if real estate investment is right for you. Are you well suited to being a landlord? Are you handy? Do you have spare cash available to cover unexpected expenses and repairs? How can you be sure you will make money? 

The Right Property

When you begin your search for an investment property, it is important to consider many things. As is always the case in real estate, location is key. The investment property should be located in a good neighbourhood, close to schools, transit and amenities. A low-crime area is also important.

Then there’s the building. If you are looking at condos or townhouses, it is important to consider the cost of monthly strata fees. Many properties have high monthly carrying costs that need to be factored in.

And what about the home itself? If this is your first investment property, it is crucial that you keep your expectations realistic. Starting with a low-cost home is a very good idea, but the biggest mistake most new real estate investors make is to buy a “fixer upper” that requires a lot of capital to make habitable. Unless you are knowledgeable about home repairs, it is always safest to buy a property that is in decent condition and “turn-key ready” if possible.

Do I Want to Be a Landlord?

Ask yourself if being a landlord is right for you. Are you willing to spend the time sourcing a good tenant? Do you have a contingency fund available to cover unexpected costs or cover the mortgage for months that the property could sit empty?

Being a landlord can be time-consuming. You may end up dealing with difficult tenants, non-payment of rent and destruction of property. Taking the time to choose your tenants wisely is critical and can involve a lot of screening and viewings.

If you are uncomfortable with the idea of being a landlord, you can hire a property management company to maintain the property for you, collect rents and oversee your investment – and even find the tenant for you in the first place. You can expect this to cost you approximately 10% of your monthly rental income, and an additional cost for tenant placement and screening.

Can I Really Afford It?

Investment properties generally require a larger down payment so right off the bat, getting into your first investment property will require a nest egg of funds to get things rolling.

Then, to determine how much you can afford to pay for your investment property, start by using a mortgage calculator. This will give you an idea of what your monthly payment will look like once you factor in current interest rates and terms.

The next step would be to contact your mortgage broker and request a pre-approval to see how much money you qualify to borrow. It is important that you let your mortgage broker know that you plan to buy an investment property because there are different lending rules for investment properties as opposed to a primary residence.

One of the biggest mistakes homebuyers of any kind make is to begin the hunt for a property before they have secured financing, By getting pre-approved you put yourself in the position to be able to jump on the right property as soon as it becomes available. Failure to do this can, and likely will, result in disappointment as you may lose out on a property while you wait for your financing to be approved.

The Potential Returns

If you have the disposition – and funds – needed to become a real estate investor, it can be highly lucrative. In 2016, the average gross yield for rental investors was 9.4%. In comparison, the average annual return on the Dow Jones over the past 10 years has been 4.8%.

You will always have more influence over your real estate investment than you would the stock market. With an investment property, small improvements such as updating kitchens, bathrooms, paint or flooring can improve the likelihood of finding quality tenants and increasing the monthly rental income for that property. It will also result in increasing the overall value of the property itself. In contrast, you will never influence the stock market by purchasing a can of Coke or an Apple computer.

Real estate investing is an amazing source of passive income over time. In our local market we have seen prices skyrocket over the past few years and the 20-year trend has been on a steady incline. If you take your time and make your decision based on the factors above, buying your first investment property will be a decision you will be unlikely to regret.






Read full post

Purchasing in a strata building means buying into its bylaws. Here are some potential deal-breakers


Buying a condo? The legal doctrine of caveat emptor (“let the buyer beware”) continues to apply to real estate transactions in BC today, and can have the effect of denying the buyer a remedy for defects and deficiencies discovered in the property after purchase. In general, the onus is on the buyer to determine the state and quality of the property being sold – rather than on the seller to point out any potential problems.

When purchasing into a strata building, an important part of the buyer’s due diligence process is reviewing and understanding the current bylaws of the strata corporation. A failure to review the bylaws can lead to nasty, unwanted surprises for new homeowners later down the road. 

Schedule “A” of the Strata Property Act establishes a standard set of bylaws that apply to all strata corporations unless some or all of them have been replaced by custom bylaws. Any bylaw amendment must be passed by a three-quarter vote of owners at either an Annual General Meeting (AGM) or a Special General Meeting (SGM). Practically speaking, most large strata corporations will have adopted their own custom bylaws.

Bylaws are only enforceable if they are registered with the Land Title and Survey Authority (LTSA). However, there is no strict time limit within which a strata corporation must register the bylaws at the LTSA after their adoption by the owners. In a seller’s condo market, it is not unheard of for prospective purchasers to submit offers without any subjects. In such cases, time-permitting, prospective purchasers should consider ordering a copy of the strata corporation’s registered bylaws from the LTSA prior to submitting an offer. 

In addition to reviewing the registered bylaws, it is important for prospective purchasers to request a “Form B” Information Certificate. The Form B discloses a variety of important information about the strata lot and the strata corporation including any copies of any bylaw amendments that have not yet been registered with the LTSA. 

Here are five types of bylaws that you should pay particular attention to, as they could make a huge difference to many buyers.

Rental Restrictions or Rental Prohibition

Particularly if you’re purchasing the property as an investment, but also if you might simply want to rent out your place and go travelling, you will want to ensure that you are in fact allowed to rent out your strata lot. The strata corporation may have already enacted bylaws that could either prohibit the rental of residential strata lots entirely, or limit the number or the percentage of strata lots that may be rented out. Strata corporations may also restrict the length of time for which strata lots may be rented.

Short-Term Accommodation Prohibition

Offering up all or part of your strata lot for short-term accommodation can be a significant mortgage helper. However, the rise of AirBnB has led many strata corporations to pass use-of-property bylaws that prohibit short-term accommodations. So, even though the City of Vancouver will now permit primary residences to be let short-term by licensed hosts, that doesn’t mean the strata corporation permits this practice.

These bylaws should not be confused with rental restrictions or prohibitions, as BC courts have found that short-term accommodations are legally different in nature to rentals. Unlike with rental restrictions or prohibitions, there is no grandfathering of use-of-property bylaws. Rather, they take effect as soon as they are registered with the LTSA.  

Pet Restriction or Pet Prohibition 

When buying a home for yourself, make sure that your pet has a home as well. Pet bylaws vary greatly and can be as extreme as a complete pet prohibition. However, it is more common for strata corporations to restrict the number and types of pets.

The often-used Schedule “A” bylaws restrict pets in a strata lot to one or more of (1) a reasonable number of fish or other small aquarium animals, (2) a reasonable number of small caged mammals, (3) up to two caged birds and (4) one dog OR one cat. Strata corporations who have passed a custom pet bylaw may have modified these restrictions and may require pets to be pre-approved and registered with the strata council.

Approval for Hardwood Flooring

Want to replace carpeting with hardwood floors before moving in? It’s important to remember that when it comes to strata living, an owner is not the master of their own domain. In an attempt to reduce noise transmission between strata lots, many strata corporations have adopted bylaws that specifically regulate the installation of new flooring.

Even if your strata corporation’s bylaws do not contain specific provisions targeting the installation of flooring, the bylaws will always contains some general provisions requiring approval of the strata council for alterations or renovations to a strata lot. Proceed with caution before making such changes.  

Insurance Bylaws

Unfortunately, many homeowners will check their strata corporation’s bylaws only after a problem arises. One very common issue faced by owners in a strata building concerns the obligation to repair water damage. Depending on the wording of insurance bylaws, you may be liable for damage caused by water escaping from your strata lot irrespective of whether you have been negligent or careless. The easiest way to protect yourself from such claims is by making sure that you purchase your own individual homeowner insurance to fill in any gaps left by the strata corporation’s insurance policy. 






Read full post

The year’s most-read news stories take in the BC election, the mortgage stress test and some diverging market predictions


In a year of market uncertainty, various government interventions and a provincial election, REW’s News + Trends category saw more clicks than ever before. But what were the hottest of all those hot topics? Here’s our countdown of our five most-clicked News + Trends stories of the year…

5. “Stress Test” for All Mortgages to Launch in New Year

The fifth most-read news story of 2017 was the announcement of the dreaded “stress test” qualification rules being extended to all new mortgage applicants. The test had already been applied to applicants for insured mortgages (less than 20% down payment) in the fall of 2016, but fears that even those buyers with 20% down payment or more were overstretching themselves – and putting banks at risk – led to the much-anticipated announcement in October 2017. There was a lot of pushback, with some decrying the decision as likely to make things worse.

4. NDP Plans 2% Yearly Tax for Non-Resident Home Owners

The only provincial election story to hit our top five most-clicked is this pre-election piece about a key NDP housing promise. The eventually victorious party pledged that if it were to gain power, it would impose a 2% tax on owners of Vancouver homes who do not pay Canadian income taxes (with many exemptions for non-taxpaying locals). As of December 2017, there’s no sign of any such tax so far, but it’s still early days.

3. New Mortgage Rules Set to Further Cool Markets Up To 10%

The second of two stories on the new stress test, this one anticipates the October confirmation about the new policy, with TD Bank predicting that it could cool the housing market. The reduction in buyers’ purchasing power could be as much as 20%, and with some markets already seeing a slowdown, the new rules could exacerbate any price corrections, said the bank. We’ll see in the first part of 2018 whether TD’s number-crunchers were right…

2. Vancouver Housing Market “Ain’t Seen Nothing Yet”

One of two prediction stories about Vancouver’s housing market in these rankings, this piece was more of a warning than an optimistic outlook. At an industry event, leading real estate marketer Cameron McNeill from MLA Canada warned that the relatively slow rate of new home construction combined with increased demand and population growth meant that Vancouver was “dancing on the edges of a massive problem” in housing supply. What does this mean for market activity and home prices? “We ain’t seen nothin’ yet,” McNeill warned. The article that covered his comments obviously rang our users’ alarm bells, as it was the year’s second most-read News + Trends story.

1. 2017 Vancouver and BC Real Estate Market Outlook

Our top story of the year was also our first story of the year. This January 3, 2017 article was a round-up of market predictions from various industry groups and Big Banks – some of them bullish, some less so. Most predicted a drop in home sales compared with the frenzy of early 2016 – correctly, as it turns out. But the overall consensus that Vancouver and BC home prices would lose ground turned out to be inaccurate – only Central 1 was correct, in that home prices in fall of 2017 would be higher than a year previously. This story was popular right off the bat in January, but readers also kept coming back to it throughout the year – perhaps to see whose predictions had been right…






Read full post

Short-term rentals are allowed starting April 2018 – but not before

A short-term rental (STR) is a home, or a room in a home, that is rented for less than 30 days at a time.

Starting April 2018, short-term rentals are allowed, based on new rules that City Council approved at the October 2017 public hearing.

Before April 2018, short-term rentals are not allowed in Vancouver, except in hotels or bed-and-breakfasts (B&Bs) that are zoned and licensed.

Current rules


Long-term rentals (30 days or more at a time) are allowed in all residential dwelling units (or a room within one) if you have a residential rental property business licence.

 Not allowed

Short-term rentals (less than 30 days at a time) aren't allowed, except for hotels or bed-and-breakfasts (B&Bs) that are zoned and licensed.

New rules starting April 2018


Short-term rentals are allowed when:

  1. It's your principal residence, in other words, where you live most of the year and the residential address you use for bills, identification, taxes, and insurance
  2. It's a legal dwelling unit (a home with an address that complies with all applicable regulations, including building code and fire safety)
  3. You have a short-term rental business licence
  4. If you're renting, your landlord allows you to sublet your home as a short-term rental
  5. If you're in a strata, your strata bylaws support short-term rentals in your building

Long-term rentals are allowed in all residential dwelling units (or a room within one) if you have a residential rental property business licence.

 Not allowed

Short-term rentals aren't allowed when:

  1. It's not your principal residence, in other words, you don't live there most of the year
  2. If you're a renter, your landlord doesn't allow you to sublet your home as a short-term rental
  3. If you live in a strata, your strata bylaws don't support short-term rentals in your building
  4. It's an illegal dwelling unit (it doesn't comply with all applicable regulations, including building code and fire safety) 

Will you have to pay the Empty Homes Tax?

No. To rent your home short-term, it needs to be your principal residence. The tax doesn't apply to principal residences.

Learn about the Empty Homes Tax

Why we’re changing the rules

Vancouver is facing a housing affordability crisis, rental vacancies are low, and short-term rental listings continue to grow. This large, unregulated market creates:

  • Health and safety risks to residents and tourists
  • Imbalance between hotels, long-term renters, and others with taxes and licencing fees

Allowing short-term rentals only in your primary residence with a business licence will:

  • Allow you to earn additional income
  • Provide Vancouver with short-term accommodation options to support our tourism industry
  • Help us respond to any concerns with noise, garbage, parking, and safety
  • Help us protect existing long-term rental housing and potentially add new long-term rental housing to the market


Here is our process and anticipated milestones.

  • Oct 2016

    City Council asks staff to create new business licence rules for renting principal residences short-term

  • Ongoing

    Staff investigate existing short-term rental operations in Vancouver and other cities

  • Jul 11, 2017

    Staff present the proposed rules to City Council, who refers them to a public hearing

  • Nov 14, 2017

    City Council holds the public hearing and approves the proposed rules and related bylaw changes

  • Apr 2018

    Short-term rentals are allowed in principal residences and you can apply for a business licence

Read full post

This invaluable checklist will make sure you don’t miss any red flags or opportunities


If you’re in the market for a new home, there are a lot of things that you need to keep track of during your home searching journey. Purchasing a home is an endless checklist of questions that both you and your REALTOR® need the answers for so you can ensure you’ve done all your due diligence and are purchasing the right place for you. To make the process a little easier, here are eight essential questions that you and your agent should ask the listing agent at an open house before you can seriously consider buying.

1. When was the roof/hot water tank/plumbing/electrical/etc. last done?

This is an important question to ask, because it will help to give you a good idea of the current condition of the property or building. By keeping a mental record of the maintenance and upgrades that have already been completed, it will allow you to estimate any future or immediate expenses upon ownership. While the listing agent may not know all these answers off the top of their head, it is at least good to ask the agent to follow up with the seller to get the answers. This information may also be obtained from an inspection, the depreciation report, or the property disclosure statement.

2. (If a strata unit) Is there a depreciation report for the building?

If the property that you’re interested is a strata unit such as a condo or townhouse, then you should ask if a recent depreciation report is available to review. It’s important to ask the seller’s agent this question, especially if you need to obtain a mortgage, because you may have more pushback from the lender without one. Furthermore, the depreciation report will provide you with information given by a third party about the state of the building and whether or not the contingency reserve fund (CRF) can keep up with the maintenance and upgrades required over time. It will show a variety of funding models, and estimate when special levies will be necessary and how much will be required of each owner.

3. (If strata) Are there any special levies coming up?

A special levy is an amount of money that needs to be paid by the owners to cover the cost of an upgrade or repair in the building or complex, such as the roof. If there’s a $5,000 bill coming up at the end of the year, you’ll definitely want to know about it. If you know that a special levy has already been approved, then your agent may be able to negotiate that the seller pays for it upon completion.

4. Is there a property disclosure statement available?

A property disclosure statement (PDS) provides a history of the property based on the seller’s knowledge. While not to be fully relied on, the PDS will provide you with a basic background of the history of the property. On this document, the seller will have answered a variety of yes or no questions such as “has there been any history of a leak?” or “has there ever been an insect infestation issue?” to the best of their knowledge. It is a common subject on a real estate contract; however, it is not required for all sellers to complete a property disclosure statement. For example, if a seller has never lived in the property because it is tenanted, then they most likely won’t want to put themselves on the line when it comes to answering questions that they’re not 100% sure about. If there is a PDS available, it typically means that the sellers have lived in the property and are therefore confident in their answers and being held liable for them.

5. Have the sellers bought a home already?

If the sellers have bought a property and need to be out in a week then the dates will be really important to them. You’ll also want to ask this because you’ll want to know whether the sellers are motivated to move or if they’re just testing out the market. This question will allow you to understand where the sellers are at in their own real estate process, and also assist you during the negotiation process to make your offer as attractive as possible so that the seller accepts.

6. Do the sellers have fixed dates in mind?

Following on from #4, before you fall in love with a property, you’ll want to know whether or not it is possible for you to move in, based on your own time frame. For some sellers it is not always about the price, and if you can find out what the preferred dates are for the sellers, you may have an upper hand when it comes to offers. If you’re able to be flexible and accommodate those dates, there have been cases where a seller is willing to accept a lower price for more ideal dates. On the flip side, if your own dates are fixed and don’t work with the sellers’ dates, then you must be willing to make a higher bid to stand a chance of success.

7. Have you received any offers on the property?

If you’re checking out a property and ask this question, the listing agent is going to tell you one of the following: we already have an accepted offer pending subject removal; we’re taking offers on a specific day; we’ve received offers and rejected them; or we’ve received no offers yet. If they have an accepted offer, they’re continuing to show the property with hopes for a backup offer in the case that the current offers collapses. If it’s a new listing, they are likely collecting offers on a specific day at a specific time in the hope of getting multiples offers. You’ll want to know whether you’re competing against no offers or five offers, because it’s likely that your offer will vary based on how many you’re competing against. If the listing has been on the market for a while, you may be lucky enough to be the only offer. However, in this case it’s important to ask if they’ve received any offers in the past and whether or not they’ve rejected them and why.

8. How long has the property been on the market?

A follow-up question to # 7, you’ll want to know how long the property has been on the market, for a couple of reasons. One is because if it’s a new listing, you may want to prepare yourself for a multiple-offer scenario. Alternatively, if the property has been on the market for a long time then you may be able to negotiate the price to your advantage. However, if it’s been on the market for a long time and you’re in a hot market then you may want to ask yourself why that is. Is there a stigma on the house? Is the property overpriced? Proceed with caution.

Buying a home is a lot of work, and it requires a lot of time spent searching for the right property and performing due diligence. For most people, purchasing a home is the largest investment you will ever make. It’s important that you ask the above questions to ensure that you know how to make your offer appealing to a seller. Furthermore, these questions will also make sure that you know exactly what you’re purchasing and are aware of additional costs for things like necessary upgrades that may come up in the near future. 






Read full post

City of Vancouver’s plans for more homes “not enough” without wider regional housing/transit strategy, says UDI


All levels of government are urged to “act quickly” in order to prevent Metro Vancouver’s housing shortage from worsening, in the latest quarterly State of the Market report issued December 5 by the Urban Development Institute.


The development industry group reported that an acute housing supply shortage continues, with just one new, move-in-ready townhome available for sale in Vancouver proper, and only 14 available across the whole Metro region, as of the end of 2017’s third quarter.



At a total of 1,813 units, new and unsold multifamily homes for purchase in Metro Vancouver, at all stages of construction, are down 84% from the peak of 11,090 units in Q1 2013.


Anne McMullin, UDI president and CEO, said, “Our industry wants to build more multi-family homes for all budgets across Metro Vancouver. The biggest obstacles are still municipal permitting delays, which can take years, and single-family zoning, restricting 85% of residential land.


“While we’ve seen an encouraging 10-year strategy to provide more multi-family options in the City of Vancouver, on a regional scale, a combined housing/transit investment action plan is needed now, or this will never be enough to meet local demand, around 97% of buyers.”


The UDI said the local population growth likely to come from the new federal immigration target increase of 13% a year by 2020, “will only add to our housing shortage and keep prices high, if local governments don’t act quickly.”






Read full post


Investing in condos can be a very lucrative pursuit. Everyday I work with condo investors whose portfolios outperform stocks and hedge fund!


Deciding whether to invest in condos, or where to invest, is usually a matter of simple math – deduct maintenance costs, insurance costs, taxes, association fees and other foreseen expenses from the value of the property and the rent you’d charge.


However, there are certain condo investor habits everyone should develop to ensure amazing cash flow from their condo investments. And today, we are going to give you five of our favorite habits of successful investors.

1. Condo Investor Habits: Maintain And Upkeep The Property

When you properly inspect, maintain, and occasionally renovate your property, renter appeal increases. This ensures the value of your unit and the rent you can charge is always maximized.


All well-maintained property projects a sense of pride in your properties, and shows a lot about you as a conscientious landlord.


Clean windows every once and a while, install a new doorknob, make sure fire detectors work, fix defects in the wall, pay for a professional cleaning during tenant turnover, consider painting. This is all minor upkeep that is minimal cost, but will make sure your investment is as profitable as it can be.


Tenants will want to rent from you, which means less vacancy rates and you’ll enjoy a steady stream of income for longer periods of time.

2. Condo Investor Habits: Have A Niche And Brand

As an investor in condominium real estate, you are essentially running a business, and it’s no secret that all successful businesses have a niche they cater to and a brand they’ve developed.


Think of who and what you want your business to cater to. Who is your target renter? Write it down, their age, profession, lifestyle, income, etc. Develop a profile of who it is you want to market to. This is part of your business plan and will help keep you on track.


Also, know your strengths and weaknesses – if you’re very familiar with a particular location or type of property, that should be what you focus on. Know what you can’t do as well – like physical maintenance – and take steps to mitigate your weaknesses while advertising and playing to your strengths.


Not a handy person? Don’t waste 6 hours trying to fix a toilet! Build a team of qualified contractor to come in and fix it. After all, your time is worth something.

3. Condo Investor Habits: Be Proactive

There’s only so much time you can whittle away at a decision, trying to figure out if it’s a good one or not.


For condo investor habits, it’s important to develop proactivity. If a property comes up for sale that’s a good deal, jump on it, because someone else sure will if you don’t.


A renter told you they’re moving out in a month? Advertise now and start coming up with a plan on what needs to be done before a new renter takes over. Plan now!


That isn’t to say you should make rash, uninformed decisions. But, inactivity will only cause you to miss out on an opportunity and your investments will stagnate. Be aware of any risks or obstacles involved, and pull the trigger.


Sometimes you will fail or have losses, but taking calculated risks are paramount to success.

4. Condo Investor Habits: Keep Learning

As investors, we often forget about the best investment anyone can ever make. Investing in ourselves!


There are always new strategies, new locations, and new information to digest. Financial and real estate laws change, and it’s important to keep up to date with those for obvious reasons.


Be involved in the condominium’s association as much as possible, as nearly every condominium complex has one and they have control over what happens at the complex and how funds are saved, spent and invested.


Commit to attending a monthly real estate meetup, or reading a real estate book once a month to keep up your skills.

There are thousands of real estate courses that can be taken online as well. Yes, the cost money, but it’s an investment in yourself, which will pay off dividends in the future.

5. Condo Investor Habits: Good Tenant Screening

It’s okay to be choosy about who you rent to, minus any applicable discrimination laws, of course. But when it comes to condo investor habits, this is the most important.


Successful real estate investors have a few things in common, and good tenant screening practices are one of them. You need a process to find tenants who pay their rent on time, don’t get into legal trouble and generally don’t cause problems.


Taking the time to ensure you get quality tenants up front will prevent a myriad of problems down the road. Here are a few important points to consider:

  • – Have a standard application form
  • – Be prepared with questions for any prospective tenant
  • – Check with professional references
  • – Do some simple online research of the prospective tenant, you’ll be amazed at what kind of public information people put on the internet
  • – Do a credit check – I like to ask tenants to submit one with their application
  • – Make sure the tenant understands the terms
  • – Give copies of condo by-laws to the tenant and make sure they know the key points

If you can develop these condo investor habits, you’ll be in a much better position to run a killer condo investment business. Know the risks, take some risks, have smart people and develop good habits, and your condo investments are sure to help you live a more financially flexible lifestyle.






Source: http://connectassetmanagement.com/5-condo-investor-habits/

Read full post

Condo and office towers under construction along Toronto's waterfront. Toronto's shortage of housing will keep the city's prices rising, and the same is true of Vancouver, says a new CIBC report.



The efforts of provincial government and federal regulators to cool off Canada's hottest housing markets will amount to little, and Toronto and Vancouver will soon be back to their old tricks, according to a new report from CIBC.


That's because both cities — and particularly Toronto — are experiencing a shortage of housing supply, and the underlying demand may be "stronger than perceived," deputy economist Benjamin Tal wrote in a client note Tuesday.


With another round of mortgage rule-tightening to kick in in January, reducing the amount of mortgage Canadians can afford by around 20 per cent, many analysts are predicting a slowdown for the housing market, especially in the priciest cities, Toronto and Vancouver.

But Tal says this slowdown will be mild and short-lived.

"The level of activity is likely to stabilize and perhaps soften in the coming quarters as markets adjust to recent and upcoming regulatory changes," he wrote.


"But when the fog clears it will become evident that the long-term trajectory of the market will show even tighter conditions."


Tal argues that both Toronto and Vancouver are suffering from a shortage of supply, particularly Toronto, where Tal says most of the available land for new developments is years away from being ready.

And with the federal government increasing immigration levels to bring in an estimated 1 million newcomers over the next three years, Tal says pressure on these housing markets will continue to grow.


"Without significant changes to land and rental policies alongside a dramatic change to housing preference among

buyers, those centers will become even less affordable," he wrote.


Non-permanent residents, such as students, are increasing as a share of the population and they may not be properly accounted for in the demand for housing, Tal wrote.

"The main issue facing this market is a significant and worsening lack of land supply."Benjamin Tal, CIBC

And he doesn't believe the new mortgage rules will change much. Under the new rules, borrowers of uninsured mortgages — those with 20 per cent down or more — will have to qualify at a mortgage rate that is about two percentage points higher than the offered rate.


"In the past, borrowers have seen tremendous ability to adjust to new situations and we doubt that things will be different this time," Tal wrote. He expects demand for housing to decline temporarily by about five to seven per cent, before bouncing back.

Other forecasts beg to differ

CIBC's forecast stands in contrast with some other recent predictions, which foresee a longer and more pronounced decline in Canada's housing markets.

In a report this September, ratings agency Moody's predicted that a majority of Canadian housing markets will see declining prices over the next five years, thanks to higher interest rates at the Bank of Canada, and the new mortgage rules.

Moody's forecast suggests the party is over for Vancouver, where it expects prices essentially to stay flat, falling by 0.3 per cent over the next five years. The agency still sees prices rising in Toronto in the coming years, but only by 7.7 per cent over five years — much slower than the double-digit growth of recent years.

'Troubling' shift to unregulated lenders

One area of concern flagged in CIBC's report is the growth in unregulated mortgage lenders.

As mortgage rules went through one round after another of tightening, larger numbers of borrowers have resorted to alternative lenders, including mortgage investment corporations. Tal calculates that 10 per cent of mortgages in Ontario now originate with these unregulated lenders.

"That transfer of risk from the regulated segment of the market to the unregulated (and in many ways unobservable) segment of the market is troubling," Tal wrote.


Read full post


The rapidly growing city of Surrey is once again ranked as the best bet to invest your buck in real estate, according to an annual ranking by the Real Estate Investment Network (REIN).


The 2017 survey identifies the top 10 cities in the province for real estate investment, based on REIN’s research. REIN’s methodology includes “all economic and demographic fundamental key drivers combined with the current influencers impacting specific markets,” according to the report.


The top 10 cities for this year’s rankings are:


1. Surrey
2. Abbotsford
3. New Westminster
4. Victoria
5. Kamloops
6. Kelowna
7. Chilliwack
8. Tri-Cities
9. Burnaby
10. Vancouver


The report said of its top-ranked city, “The main conclusion for strategic investors from these key drivers is that Surrey is a unique combination of a youthful, growing city with a diverse economy that is relatively affordable compared to the rest of the Metro Vancouver region.” It also cited increasing home sales, decreasing inventory and low rental vacancy rates as major factors in Surrey’s housing market.


Each city is identified as sitting somewhere on REIN’s boom-bust-recovery cycle, which sets out nine stages of the market. Surrey is said to be in the “beginning of a boom” stage.



The report also advises investors on the best investment tactic, based on the particular market stage each city is in. Being in the beginning of a boom, REIN advises investors in Surrey that the fix-and-flip approach will net the best return.



Vancouver squeaked into the top 10, despite being described by REIN as at the “end of a boom.” The report authors said that even though this is the market’s current status, having seen rapid home-price rises over recent years, “prices, especially in the condo market, are not expected to drop dramatically from this peak.”







Read full post

Retail investment in Vancouver surpassed $2.8 billion in the first half of 2017, eclipsing the previous record of $1.6 billion in all of 2016, says a new report by commercial real estate firm CBRE Canada.


Several major international retailers, and some growing local brands, are keeping downtown Vancouver’s retail market vibrant, a CBRE study finds.


The market is being driven by major international brands setting up shop in the West Coast city and sparking a renaissance in the retail sector.


The report says vacancy rates in downtown Vancouver continue to remain at historically low levels at 2.9 per cent, with mostly consistent rental rates and international brands continuing to drive new demand for retail space.


“Vancouver’s got great traction right now from an international standpoint. We are principally real estate brokers and our phone rings all day long from interested groups but in the last 18 months to two years it’s really transformed into strong international calls,” says Martin Moriarty, associate vice-president of Retail Leasing & Investment at CBRE Vancouver.


“Part of it is Vancouver’s growing reputation in the world. There’s a few things going on here that’s putting Vancouver on the map by way of residential projects, by way of the investment market here. We are also still having some very strong brands emerging for Vancouver.”

Five major new brands enter market

The report says five major international brands opened stores in the past year or announced they will be opening soon on Robson Street – Muji from Japan, Bailey Nelson from Australia, Laduree from France, Nike from the U.S. and the Vancouver-based athletic wear designer, Reigning Champ.


Japanese retail giant Muji is expected to open their biggest North American store at 16,000 square feet on Robson later this year.


On Alberni Street, the new high street for prestige brands, sales exceed that of Toronto’s Bloor Street, with rents escalating up to 50 per cent higher than that of Robson Street, says CBRE.

“As such, the demand for space is exceeding supply. A number of new stores are entering the market – including Van Cleef & Arpels, the French jewelry, watch and perfume brand and Hublot, the Swiss luxury watch brand – with more to follow in the remainder of the year,” says the report.

Growing international reputation

Moriarty says the expansion of international brands into the Vancouver retail market is transforming the city and brands in major centres such as London, Tokyo, Paris, Geneva and Sydney are attracted to Vancouver’s growing international reputation.


Gastown also saw an increase in the presence of international retailers with COS and Filson opening locations in 2017 and a second Bailey Nelson location to open soon.


Vancouver is proving to be a shining example that although the trend in e-commerce sales is growing, many consumers still prefer bricks and mortar for their shopping experience.


“E-commerce is having an effect, but I don’t think the effect is the termination of the existence of bricks and mortar. It’s changing the way the users and the tenants are operating. We have done a lot of deals with tenants that have tried to up their game by way of the ‘experience’ because that really seems to be emerging as a big thing,” says Moriarty.


“A product is very important but the experience is also as important.”

Vancouver set to keep growing

A recent report by Statistics Canada said population growth is driving a rapidly expanding retail market in the Vancouver region with sales increasing from $22.2 billion in 2004 to $36 billion in 2016, a rise of 62 per cent.


At the same time, the Vancouver CMA’s population went from 2.1 million people to 2.6 million, up by 19.4 per cent.


“Moreover, population projections suggest that the Vancouver CMA could see a further 26.4 per cent increase in its population in the next 20 years, which will likely increase the need for planning the location of future shopping centre developments,” says the StatsCan report.

There were 209 shopping centres in 2016 in the Vancouver region and Statistics Canada added there were 9,429 retail stores operating.


Read full post

If passed, new rules will apply to both new and existing tenancy agreements


B.C.'s provincial government has announced legislation to close what has been dubbed a major loophole affecting renters in the province.


Critics say the loophole allows landlords to bypass rent controls by having residents sign a fixed-term lease with move-out clauses. At the end of each term, tenants must either move out or sign a new lease at a reassessed market rental rate. 


In places like Vancouver where the rental market is especially tight, that new market rental rate can be hundreds of dollars higher, exceeding what would be allowable under the Residential Tenancy Act for the same tenant.


B.C. Housing Minister Selina Robinson said the new legislation would protect the rights of renters who have been left open to "unfair and unjustified rent increases."


"By closing this loophole, renters will know they'll be able to stay in their homes without the threat of skyrocketing rents," Robinson said.


If passed, the legislation would restrict a landlord's ability to use a vacate clause in fixed-term tenancy agreements and limit rent increases between fixed-term tenancy agreements for the same tenant to the maximum annual allowable amount (currently two per cent plus inflation).


Liberal MLA Todd Stone said while the measures may improve housing affordablity, putting more restrictions on landlords could affect rental supply.


"We want to just make sure that the measures being proposed here, and how they are implemented, ensures a continued balance between renters and tenants," Stone said.


LandlordBC CEO David Hutniak applauded the loophole's closure, saying his organization had raised concerns about a "growing cohort" of unscrupulous landlords abusing it for over two years.


"We were very concerned about it. It was damaging the industry, we felt," Hutniak told On The Coast guest host Gloria Macarenko. "Really, we felt it was unfair to responsible, professional landlords, which are the majority."


But Emily Rogers, a tenant advocate with the Victoria chapter of advocacy group Together Against Poverty Society said the measures might not go far enough.


She expressed concerns landlords would use other provisions to increase the rent further than the allowable increase.


"I would like to see rent tied to the unit rather than the tenant," she said. "It would ensure that rent increases do not exceed the annual allowable rent increase every year."


The province says the new rules will apply to both new and existing tenancy agreements.








Source: http://www.cbc.ca/news/canada/british-columbia/b-c-announces-legislation-to-close-fixed-term-rental-loophole-1.4374057

Read full post

Giving Vancouverites priority on new homes is a fine idea, but only part of a much larger puzzle


There has long been rampant media speculation – and, in some cases, seeming proof – that at least some local real estate developers are marketing their Metro Vancouver projects overseas as a priority, leading them to be virtually sold out by the time locals can get their hands on the units.


Certainly it very often seems to be the case that only a handful of condos are still available for sale when it comes to the local sales centre opening day. And that leads to many, many frustrated buyers left out in the cold, and all competing with each other for other units, of which there are not nearly enough being built, or coming on the resale market.


So on the face of it, Vancouver Mayor Gregor Robertson’s proposal to implement a “locals first” policy and limit bulk-buying, modelled on this successful project in West Vancouver, would seem to be a good idea. Give Metro Vancouver residents first crack at all the new condos coming on stream, before non-residents are allowed to scoop up the remainder (if there are any left). Surely this will help with our housing supply and affordability issue?


Well… maybe a bit. It’s certainly a perfectly fine idea that can’t do any harm and might just help a few buyers get their hands on units they might not otherwise have access to. If I were voting in council next week when the proposal is tabled, I’d vote yes, and I would be surprised if this public-pleasing motion didn’t pass.


But I suspect the impact this new policy will have on our housing supply and affordability problems will be, sadly, minimal. The issue is multi-faceted.


First, we don’t really know how many new Metro Vancouver units are truly being marketed overseas first. Shouty media headlines about individual projects may have a lot of impact on the public perception on the topic, but that doesn’t prove that it is necessarily a widespread practice. Perhaps it is, but we have no real evidence of that. The Urban Development Institute claims that marketing overseas is relatively minimal, stating in response to the new proposal, “UDI members already sell the vast majority of multi-family housing units, over 90%, to local buyers, which is often a bank construction financing requirement.” That is to say, developers won’t get the money they need to build the project if they are taking on lots of presale contracts with overseas buyers, which are perceived by the banks as riskier than local buyers. Certainly, media reports about overseas marketing events don’t make it feel to the average local resident like this 90% figure can be accurate, but the UDI does collect huge amounts of data about buyers of new homes in the Lower Mainland from its members. If it is right, the new policy will help locals get their hands on only an additional 10% or so of units. Which is probably still worth it, but not dial-moving for affordability.


Second, even with all new units available to Metro Vancouverites, that doesn’t necessarily mean those homes will become more affordable, just because locals are no longer competing with non-local buyers. Even if you believe the UDI’s above figure is inaccurate, and the new “locals first” policy will release a much higher proportion of new units to local buyers, those homes will still be expensive. Land is still expensive, permitting and consultation processes are still time-consuming and expensive, construction costs are still expensive. To make projects profitable, developers will still charge the same high prices we’ve been seeing, knowing that if local buyers want the units, they will cough up – or if the project doesn’t sell to locals, non-local buyers will absorb the rest later. But in fact there’s also still a huge appetite for pricey condos even among local buyers, who very often have more money at their disposal than affordability reports imagine. That said, it’s possible that the easing of competition in the presale market will have a knock-on effect of taking some buyers out of the resale market, and improving supply there. So again, it might help a bit.


Thirdly, you’d have to also ban the practice of “insiders” getting first crack at local projects – people such as family and friends of the developers. It is often perceived that it must be overseas buyers who have snapped up units when there are not many left for locals. But on some projects, it has been suggested that particular groups of locals are getting in on the action first. So in addition to preventing bulk-buying, which the Mayor’s proposal also intends, perhaps it should also require that 100% of units are available for sale on the local public sales centre opening day.


But to really move the dial on affordability, there needs to be a much more massive influx of new housing for local buyers to get their hands on, and of much more widely varying and flexible home types. Dramatically increase supply with pervasive rezoning, dramatically cut permitting costs and times, flood the market with new homes and – even with the expensive land and construction costs – developers will have no choice but to be competitive with pricing. Perhaps add to that a requirement for income-linked non-market housing on every new project, or subsidize particular projects to offer all homes at below-market pricing like this one in Victoria. Build smaller units, less expensively finished units, units with lock-off suites to act as mortgage helpers. Get creative. Be radical. Stop drip-feeding supply and open the floodgates.


But sure, also give locals first pass on presale condos. It can’t hurt.






Read full post

Inventory at 10-year lows in most regions, pushing prices ever higher



The number of homes sold on the Multiple Listing Service® in BC in September rose nearly 10% year over year, and 5% from August, according to a report by the British Columbia Real Estate Association (BCREA) published October 12.


Because there was also an increase in sale prices, that lead September’s total sales dollar volume to rise by a

whopping 30.2% compared with the same month last year.


The average resale price of a home in the province last month was 18.5% higher than one year previously, at $693,774, which is up 2.3% in a single month since August’s average of $678,168.




The annual jump in homes exchanging hands across the province is largely driven by increased activity in the Lower Mainland, which has seen a recovery from the effects of the Metro Vancouver foreign buyer tax introduction last August. Of the larger markets, Greater Vancouver and the Fraser Valley posted the largest annual sales gains, both up around 25%, whereas Victoria saw the province’s biggest year-over-year slide in unit transactions, down 16.6%.


Some of the Interior and smaller markets also saw annual sales declines, although Kamloops and Chilliwack both had a strong showing, up 8.2% and 7.7% respectively.


The annual price rises seen by the different boards also varied, but did not necessarily mirror sales patterns. Nine out of the 11 BC boards reported year-over-year average price increases. Of the larger markets, where price changes are less volatile, the Fraser Valley and Greater Vancouver saw the biggest price gains, up 18.2% and 17.7% respectively. But Victoria, where sales dropped, posted an average price increase of 12.5%. Only the very small markets of BC Northern and Norther Lights saw minor annual average sale price declines.


Eight of the 11 boards posted year-over-year declines in the number of active listings in September, although Greater Vancouver was not one of them.


“Total active listings on the market continue to trend at 10-year lows in most BC regions, limiting unit sales and pushing home prices higher,” said Cameron Muir, BCREA chief economist.


“While the economic fundamentals support elevated housing demand, rising home prices are eroding affordability, particularly for first-time buyers.”


The BCREA report was issued on the same day as Royal LePage’s 2017 Q3 House Price Survey, which looks at quarterly price activity in Canada’s major urban markets. The report said that during the third quarter, the aggregate home price in Greater Vancouver rose year over year by a “modest, but healthy” 2.5% to $1,229,133.


However, when broken out by housing type, the brokerage found that the median price of a Greater Vancouver condo increased 17.6% year-over-year to $622,392. The median price of a bungalow had a much more reasonable increase, up 3.5% year-over-year to $1,422,458, but the median price of a standard two-storey home fell 1.1% to $1,532,849 in the same period.





Source: http://www.rew.ca/news/home-sales-prices-across-bc-rise-again-in-september-1.23062913

Read full post


The drop in interest rates has been so significant that the interest burden of servicing debt has declined as a share of income, despite growing household debt.


With headlines about Canadian household debt hitting record levels and dire warnings from top policy-makers such as Bank of Canada governor Stephen Poloz, Canadians may think household debt is out of control.


The concerns, however, often fail to properly account for the other side of the balance sheet.


Yes, Canadian households have taken on more debt. But they’ve used this debt to finance assets – real estate and retirement savings, for example – that grow over time, causing their net worth to swell, also to unprecedented levels.


By the end of last year, household debt eclipsed $2 trillion, up from $357 billion in 1990. Two-thirds of this debt is for mortgages; the remaining third is split between consumer credit (29 per cent) and other loans (five per cent).


Despite the preoccupation with overheated real estate markets, the mortgage share of total household debt has remained stable. The $2-trillion-plus in household debt now equals approximately 170 per cent of household disposable income compared to just 90 per cent in 1990.


So does this mean Canadians are being irresponsible with debt?



The growth in household debt has partly been a rational response to plummeting interest rates. The Bank of Canada rate has fallen dramatically from nearly 13 per cent in 1990 to 0.75 per cent at the end of last year. Not surprisingly, as the cost of borrowing has dropped, Canadian households have borrowed more.


The drop in interest rates has been so significant that the interest burden of servicing debt has declined as a share of income, despite growing household debt. Today, interest payments on household debt consume six per cent of disposable income compared to almost 11 per cent in 1990.


That brings us back to the other side of the balance sheet – household assets. While household debt has grown substantially over the past 26 years, households are borrowing to invest in appreciating assets such as real estate, pensions, financial investments and businesses. Canadian household assets rose from $2.2 trillion in 1990 to $12.3 trillion in 2016.


The significant investment in assets has meant that household net worth (total assets minus liabilities) surged from $1.8 trillion to $10.3 trillion, a record level, during the same 26-year period. As a share of gross domestic product, household net worth rose from 265 per cent to 498 per cent.


While government policy-makers fret over household debt, the irony is that unlike government, household net worth is positive and increasing over time.


Debt is a tool and the concern should only be about debt that’s not manageable given the economic circumstances of a given household. The greatest risks to management of household debt are:

• economic shocks that lead to job losses, which make it harder for people to service their debt;
• increases in interest rates that raise debt-servicing costs.


Even with any small forecast increases, interest rates remain low and the Canadian economy has performed adequately in terms of employment, with relatively low jobless rates.


While these macroeconomic factors are of concern, they should also be kept in context. Despite record high levels of household debt, there are also record high levels of net worth.


Livio Di Matteo is senior fellow at the Fraser Institute and author of the study Household Debt and Government Debt in Canada, available at www.fraserinstitute.org.


By Livio Di Matteo
Senior Fellow, The Fraser Institute

Troy Media



Read full post

Vancouver is Canada's least affordable region for housing, according to new RBC data


Vancouver’s housing affordability won’t be tamed, according to new data from RBC.


The bank reports that it’s affordability measure for Vancouver climbed 2.6 percentage points in the second quarter of 2017 to retain its title as Canada’s most unaffordable market.

RBC’s affordability measure calculates the proportion of median pre-tax household income required to service the costs of mortgage payments, property taxes and utilities based on the average market price for a detached home or condo.


New data released Friday (September 29) pegs those costs at 80.7% of household income for the Vancouver market.


For detached homes the measure is at 114.6%. Condos come in at 46.2%.


Vancouver has the highest measures recorded in Canada among all categories.


“The rise in the second quarter reflected a tightening of demand-supply conditions. Home resales picked up following a year-long correction as the dampening effect of policy measures introduced last year to cool the market — which included a 15% tax on purchases by foreign nationals — waned,” RBC’s Housing Trends and Affordability Report stated.

“With demand-supply conditions back in favour of sellers, home prices resumed an upward trajectory this spring. This means that the window for a meaningful improvement in affordability in the Vancouver area likely has closed for now.”


Toronto follows Vancouver at 75.4%, while Victoria moved up 1.8 percentage points to 58.6%.






Read full post

Bank of Canada won’t raise overnight rate again until 2018, predicts BCREA


Having raised the overnight rate twice, in July and earlier this month, the Bank of Canada will adopt a wait-and-see approach to its next interest rate hike, according to a Mortgage Rate Forecast reportpublished September 19 by the BC Real Estate Association (BCREA).


Having “surprised” Canada by turning “hawkish” with its sudden interest rate rises, the BCREA’s economists predicted, “We anticipate that the Bank of Canada will hold off on further rate increases this year and assess how higher rates are impacting the economic and inflation outlook.”


But the report added, “However, in the Bank’s recent communications, it has very clearly left the door open for more aggressive tightening should the current torrid pace of economic growth continue.”


The BCREA pointed out that the posted five-year qualifying rate has risen in response to the BoC’s first overnight rate hike. It said, “After the July interest rate hike, markets widely expected at least one additional rate increase in the fall, and so bond markets and lenders had already priced in the September increase by the time it occurred.”


It predicted that rising bond yields would result in further increases in the five-year posted rate and the average discounted five-year mortgage rate.



The report added that the rising posted five-year qualifying rate is “an interesting development, because it is the first increase in the posted rate since stricter qualifying rules for insured mortgages were imposed last fall.”


The BCREA concluded, “Our baseline forecast is for gradual rate increases over the next two years, with the Bank of Canada’s overnight rate ending 2018 at 1.5 per cent.”




Read full post