Tuesday, October 15, 2019

BC homebuyer spending jumped by $1.3 billion this September

It may seem like a gargantuan figure, but BC’s housing market is chugging again as encouraging signs from the summer market carry into the busy fall homebuying season.

The province’s average home price rose to $697,943 and a total of 6,938 homes changed hands in September. All that amounted to a nearly $1.3 billion increase in home sales dollar volume last month compared to September 2018.

While the high figures make it sound like the BC housing market could be returning to its red hot (and some may argue, overheated) 2016 days, it’s actually much more like a return to normalcy.

The British Columbia Real Estate Association (BCREA), which released the data early on Tuesday, reported the positive gains across the province’s major housing markets, while seeking to temper reactions by providing some important context for the numbers.

“Markets across BC built on momentum from the summer,” says BCREA Chief Economist Brendon Ogmundson. “While the year-over-year increase in provincial sales was quite strong, home sales in most areas are simply returning to historically average levels.”

Indeed, even as the momentum increased through the summer and into September, 2019 still has many of the markings of a tough market when looking at all the data available for the first nine months of the year.

Year-to-date sales dollar volume is 12.4 percent lower and total sales are 8.9 percent below the same period in 2018. BCREA calls the province’s overall market conditions “balanced.”

The Real Estate Board of Greater Vancouver had a similar story to tell earlier this month as buyers in the province’s largest housing market began getting comfortable with opening their wallets again.

Despite large home sales increases observed in September, market experts noted that the sales levels were merely “typical” when compared to historical averages. But, as one expert pointed out, the upshot is a more comfortable market for both buyers and sellers.

“We’re seeing more balanced housing market conditions over the last three months compared to what we saw at this time last year. Home buyers are more willing to make offers today, particularly in the townhome and apartment markets,” said Ashley Smith, President of the Real Estate Board of Greater Vancouver, in a media release.

“This is a more comfortable market for people on both sides of a real estate transaction,” she continued.

Watch BCREA Chief Economist Brendon Ogmundson discuss the September 2019 statistics.

The Housing Market Update video webcast is produced monthly by the British Columbia Real Estate Association. Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: "Copyright British Columbia Real Estate Association. Reprinted with permission." BCREA makes no guarantees as to the accuracy or completeness of this information. 

Housing prices on Vancouver Island outside of Victoria climb at highest rate in B.C. in September

he average price of a home continues to climb on Vancouver Island, but it’s outside of Victoria that the increase is the most pronounced.

The Canadian Real Estate Association says the average price of a home on Vancouver Island is now $496,100, up 4.02 per cent from September of 2018.

In Victoria, the average price is $689,600, up 0.5 per cent from the same period last year.

Prices continue to fall in Greater Vancouver, on the Lower Mainland, and in the Fraser Valley, down 7.28 per cent, 6.41 per cent and 4.68 per cent from September 2018.

Across the country, the CREA says the number of home sales in September was up 15.5 per cent compared with a year ago as sales in the country’s big cities climbed higher.

The association says sales compared with a year ago were up in Canada’s large urban markets, including B.C.’s Lower Mainland, Calgary, Edmonton, Winnipeg, the Greater Toronto Area, Hamilton-Burlington, Ottawa and Montreal.

On a month-over-month basis, home sales through the Canadian Multiple Listing Service were up 0.6 per cent in September.

Home sales in Canada have been rising since hitting a six-year low in February.

The national average price for homes sold in September 2019 was about $515,500, up 5.3 per cent from the same month last year.

Excluding the Greater Vancouver and Greater Toronto regions, the average price was less than $397,000 and amounting to a year-over-year gain of 3.3 per cent.

Saturday, October 12, 2019

Municipal Policies Rooted in Appropriating Private Property

The appropriation of private property is becoming a favourite tool of local politicians demonstrating to the public their concern about housing affordability, the environment and a variety of other hot issues that they have mostly mismanaged.
For example, Victoria council voted to require 20% of new condo units to be affordable rental. Of course the costs of this subsidy must be absorbed on the mortgages of the 80% new unit purchasers. The costs of production are always paid by the end user. https://www.vrba.ca/victoria-council-considers-new-exclusionary-housing-policy/
Saanich council has its own version of appropriation called “Natural Saanich.” It’s a new spin-doctored name for the Environmental Development Permit Area (EDPA) that was rescinded because it was unfair and costly for homeowners and builders. “Natural Saanich” sounds as if new housing is somehow “unnatural.” The subtext is vacant land is good and development is bad.
The bottom line is the Victoria and Saanich initiatives are rooted in govt appropriation of private property to achieve agendas creating unfair, negligible results.
Victoria struggles with affordability because they have the most costly, obstructive development processes, (a tie with Saanich.)
On the other hand, Langford builds 40% of all new homes and 60% of new rentals in the CRD because they have the most efficient development processes.
A recent editorial in the Times Colonist said: “Let’s go all Langford on new development. We know cutting red tape works, after all we have proof just up the highway. But rather than dealing with the obvious problems, council members try to engineer the market to fit their thinking.” https://www.timescolonist.com/opinion/editorials/editorial-victoria-council-s-20-edict-will-discourage-new-housing-1.23872992
Victoria also has a policy of taking 75% of the lift value in the land from higher density. Higher density on land enables costs to be lowered, but Victoria sees this as an opportunity for more city revenue. Of course they won’t be writing any cheques during the inevitable market downturns. Somehow, they feel they have a right to appropriate private property without taking any of the risk.
View Royal council is considering a similar policy, and is giving themselves a pat on the back for a policy that appropriates only 50% of the lift on private land.
Saanich council prides itself on rural roots, so much so, that it implemented an EDPA that obstructed housing in the zone established for housing called an urban containment area. If housing is prevented in this area, where will it go? https://www.vrba.ca/protect-housing-in-urban-containment-areas/
After residents opposed the EDPA, council is promoting a new version called “Natural Saanich.” It is simply another way of obstructing new housing. Saanich already has strong streamside and wildlife protection, tree protection, and similar regulations for the environment. In fact, their strongest protection is that a new development cannot move forward unless approved by council. Yet, passing new regulations on private property, a form of appropriation, seems to be the preference of elected officials.
What is needed now in the interests of housing supply and affordability is protection from politicians using housing as a cash machine and ignoring private property rights – rights that most homeowners spend a lifetime paying for with mortgages.

B.C. senior fears massive condo levy could force her out of her home

Published Friday, October 11, 2019 6:35PM PDT
Last Updated Friday, October 11, 2019 7:40PM PDT

ABBOTSFORD - A Fraser valley senior facing an enormous condo levy fears she could be forced from her home if she can’t come up with the money.

86-year-old Mabel Olscamp has been living at Dogwood Manor in central Abbotsford for 26 years.

In June, the building’s strata council voted to move ahead with a $1.4-million project to repair the buildings balconies and replace windows and siding.

The cost was divided amongst the 33 units and Olscamp learned her share was more than $44,000 – due by September 30.

"I can't get that money because I already took out a loan against my mortgage and I don't have the income,” she said. “I'm a senior, 86-years-old, and I don't have that kind of money to meet that commitment because the payments would be sky high."

The deadline came and went and that’s when Olscamp approached her bank and staff there helped her come up with a plan to make payments over a period of time.

"They're hesitating,” she said of the strata council. “It appears that they don't want to accept this proposal."

Ken Billingham, vice president of the council, told CTV News Olscamp’s proposal lacked specific dates for payments and that’s why it hasn’t been accepted.

"A demand letter has gone out to the owners that are in default and subsequently one of the options open to the strata is to put a lien on the property,” said Billingham.

The executive director of the Condo Homeowners Association of BC says this situation is a good reminder for stratas to make sure they have healthy contingency funds.

"If you had been saving the money, maintaining your buildings and doing the work all along, you wouldn't be facing a special levy today,” he said during a Skype interview from Ottawa. “You'd have money in the bank, your buildings would be in better condition. No one would be in this situation."

Olscamp fears she’ll be forced to sell to cover the bill – and doesn’t know where she will go if that happens.

"I don't have that kind of money. I'm going to be put out of my place,” she said. “They're going to place a lien, sell my place, and recover the money.”

Friday, October 11, 2019

This year's sales continue to outstrip 2018’s, amid weaker starts

Despite signs of housing starts losing steam, Canada’s home sales remain stronger compared to last year and the early months of 2019.

“This continues to reflect strong demographic demand, both from international inflows and new households created within Canada,” Bank of Montreal senior economist Robert Kavcic told The Canadian Press.

“There’s a lot of homebuilding activity going on across the vast majority of Canada.”

The number of transactions is expected to continue growing, amid significant boosts from lower rates and a growing consumer population.

The Canadian Real Estate Association recently adjusted its 2019 resale forecast up to 482,000 units, around 5% higher from 2018.

“Canada’s housing sector is back on the front foot with resales picking up as the year progresses and homebuilding activity clearly displaying some momentum,” RBC senior economist Josh Nye stated.

“Ontario, the Prairies and Atlantic Canada are on the rebound while the trend in BC and Quebec remains strong despite slower starts in the last month or two.”

The pace of Canadian housing starts in September was markedly lower on a month-over-month basis, according to data from the Canada Mortgage and Housing Corp.

The seasonally adjusted annual rate of new home construction stood at 221,202 units in September, decelerating by 2.5% from August’s 226,871 reading.

Experts have earlier predicted an annual pace of 214,500 for the month, according to financial markets data firm Refinitiv.

Urban starts also declined by 2.4% to 208,503 units, although apartments, condos, and other multi-unit developments ticked down by just 0.2% to 159,742. Meanwhile, single-detached starts in urban markets fell by 9.2% to 48,761 units.

Condominium prices climb, house prices take dip: survey

The selling price of condominiums in Greater Victoria has started to take off as thousands of new units hit the market, according to a new house price survey released by Royal LePage.

The median price of a condominium increased six per cent to $493,448 in the third quarter of this year, compared to the same time in 2018 the survey found.

At the same time, prices of single-family homes were heading in the other direction, with the median price of a bungalow dropping 0.8 per cent year-over-year to $765,091 and the median price of a standard two-storey home dropping 1.5 per cent to $858,658.

Overall, the price of a home in Greater Victoria softened modestly during the third quarter of 2019, decreasing 0.4 per cent year-over-year to $760,475.

“Newly constructed developments are driving strength in Victoria’s condo sector. Units in these new builds are being sold quickly,” said Neil Bosdet of Royal LePage Coast Capital Realty.

“We are seeing millennial and first-time home buyers attracted to condos for their relative affordability. Younger generations are also willing to sacrifice space for a more desirable downtown location.”

However, Bosdet noted many first-time buyers are migrating outside the city centre to more affordable communities. The numbers explain the movement of construction cranes from one new condo tower to the next building site around Greater Victoria.

So far this year, out of 2,569 total housing starts, there have been 1,831 new apartments or condos started in the region. And as of this month there are 4,644 condos or apartments under construction.

According to Royal LePage’s survey, the price of a home in Canada has continued to post steady, year-over-year gains during the third quarter of 2019 as the real estate market sustained its recovery from the significant downturn of 2018 and early 2019.

Thursday, October 10, 2019

Canadian housing activity benefits greatly from population growth

A significant driver of Canada’s housing dynamism is its population growth, taking into account the latest sales figures from major markets.

Statistics Canada data showed that the national population expanded by 531,497 to roughly 37.6 million in July, ending up as the greatest year-over-year increase registered since the 1970s.

A RE/MAX survey conducted by Leger earlier this year found that Toronto, Vancouver, and Calgary have all been ranked among the 10 best cities to live in across the world. Much of their attractiveness lies in their population growth and other positives like healthcare, education, retail availability, and ease of transport.

These factors tend to outweigh the impact of higher prices, according to RE/MAX of Ontario-Atlantic Canada executive VP Christopher Alexander.

“While price and value are always top of mind for buyers, there are some aspects about a home that you can’t change,” Alexander stated at the time. “These liveability factors are what make your home more than just the place you live.”

Condo markets in these leading Canadian cities have accelerated significantly this fall, especially when compared to other major cities south of the border.

Last month alone, benchmark prices in Toronto went up by 5.2% annually to $805,500. This was only about $10,000 below the record highs achieved around two years ago, Bloomberg reported.

And even though Vancouver prices have exhibited a downward trend over the last few months, sales activity intensified by a massive 46% year-over-year, making September the third straight month of sales growth.

Even Calgary, which is still recovering from the catastrophic effects of the oil industry turmoil seen from 2015 onwards, enjoyed an 8.2% annual increase in sales in September.

To compare, the traditionally hot Manhattan market has been labouring under a steady sales slowdown over the past two years. During the third quarter, resale prices for Manhattan condos and co-ops shrunk by 8% annually.

Wednesday, October 9, 2019

Greater Victoria’s hot homebuilding sector cooled by regulations, says critic

The pace of homebuilding in Greater Victoria bucked a national trend in September as 509 new homes started coming out of the ground, according to data released Tuesday by Canada Mortgage and Housing Corporation.

While the pace of housing across the country slipped 2.5 per cent on a seasonally adjusted basis last month, Victoria counted 67 new single-family homes started and 442 multi-family units in September. That nearly doubled the number started in September 2018, when 263 new homes got underway.
However, Victoria Residential Builders Association executive director Casey Edge said the real story is hiding in the year-to-date figures.

Through the first nine months of this year, builders have started 2,569 new homes, down from the 3,028 started in the same period last year.
“The year-to-date gives a better indication of the health of the industry,” said Edge.

He claims the federally imposed mortgage stress test, the provincial speculation tax and municipalities hiking up development cost charges and dragging out approval processes have all combined to choke the pace of building at a time when all regions claim there is a lack of housing.
“They all throw up challenges to the housing market,” Edge said, noting the region is still dealing with low unemployment and a growing population that put increased demand on housing.
Edge agreed that a lack of skilled trades can contribute to the pace of construction, but he is adamant the real culprits are the hurdles put in place by government policy.
The slowdown of residential building in the country was not as extreme as some economists had predicted.
Many had expected an annual pace of 214,500 new units for September, but instead saw a trend of 223,507 last month.
“This continues to reflect strong demographic demand, both from international inflows and new households created within Canada,” said Robert Kavcic, a senior economist at the Bank of Montreal. “There’s a lot of homebuilding activity going on across the vast majority of Canada.”
The overall decrease in the rate of housing starts last month came as the pace of urban starts fell 2.4 per cent to 208,503 units.
Urban starts of apartment, condo and other types of multiple-unit housing projects dipped 0.2 per cent to 159,742, while starts of single-detached urban homes fell 9.2 per cent to 48,761 units.
Rural starts were estimated at a seasonally adjusted annual rate of 12,699 units.
The six-month moving average of the monthly seasonally adjusted annual rates of housing starts was 223,507 in September, up from 218,782 in August.
The CMHC’s monthly report follows industry figures that show home sales have been stronger than last year and stronger than the early months of 2019.
“Canada’s housing sector is back on the front foot with resales picking up as the year progresses and homebuilding activity clearly displaying some momentum,” Josh Nye, a senior economist at Royal Bank, said Tuesday.
“Ontario, the Prairies and Atlantic Canada are on the rebound while the trend in B.C. and Quebec remains strong despite slower starts in the last month or two.”
— with files from The Canadian Press

Monday, October 7, 2019

Landlords account for a growing proportion of owners in BC, ON

Landlord ownership is steadily increasing in BC and Ontario, according to Statistics Canada.

The agency reported that as of 2018, the number of multiple-property owners in BC was over 268,600. Vancouver accounted for 53.6% (143,910 owners) of this demographic.

In Ontario, there were 835,175 of these kinds of owners last year, with around 43% (359,475 owners) in Toronto alone.

The two provinces, which host the two hottest residential real estate markets nationwide, have an abundance of housing investors. Taking advantage of these cities’ desirability, many of these owners have chosen to rent out these properties.

“The number of small landlords shouldn’t surprise many. Canada’s addiction to cheap financing makes condo development more favourable,” Better Dwelling stated in its analysis of the StatsCan data.

The implications on future supply cannot be understated. In recent years, new developments have tended towards high-end offerings that solely serve the needs of wealthy domestic and foreign investors.

Realosophy Realty president John Pasalis has argued that the growing prevalence of investment-use condos is a major factor in sky-high housing prices, further adding fire to the market’s long-running home affordability crisis.

“Five years down the road, do we really need 50,000 micro-condominiums that are renting for $2,000 a month?” Pasalis stated earlier this year, as quoted by The Guardian. “I think this is the risk when your entire new housing supply is driven by what investors want, rather than what end users want.”