Tuesday, August 20, 2019

This week's housing newsletter



was written by HuffPost Canada senior business editor Daniel Tencer.


It’s hard to lose money in real estate these days, almost anywhere, but Vancouver is among an elite group of cities where the wealthy are doing just that.

The city, once an unstoppable juggernaut of foreign money and rising prices, has ranked at the bottom of a list of the world’s hottest luxury housing markets for the fourth quarter in a row.
That means Vancouver has now spent a year as the world’s weakest luxury market in Knight Frank’s ranking of 46 major world cities. Luxury house prices fell by 13.6 per cent over the past year, the real estate agency said.
Toronto ranked 13th, with prices up 3.8 per cent in a year. Those two are the only Canadian cities on the list.
Meanwhile, the new ranking champion of luxury housing is Berlin, where luxury homes jumped 12.7 per cent in price over the past year, despite a slowing economy in Germany.
There’s no cutoff for what counts as “luxury” housing; rather, Knight Frank defines it as the top 5 per cent of a housing market.
Vancouver spent a few years at the top of the ranking, before it began a decline in 2016 after British Columbia introduced a 15-per-cent foreign buyers’ tax for Vancouver and surrounding areas, which was later bumped up to 25 per cent.
Ontario introduced a similar 15-per-cent tax for the Toronto area a year later, and the city’s luxury market slid in the rankings after that measure came into place.

A dramatic slide

But Vancouver’s slide has been far more dramatic. “Whilst both operate a foreign buyer tax, Vancouver has seen a flurry of additional measures aimed at reducing speculation and curbing price inflation,” Knight Frank noted in its report.
That includes a controversial empty-homes tax, which charges one per cent of a home’s assessed value for every year, or majority part of a year, that it’s unoccupied.
Still, Vancouver is in good company among the cities whose luxury housing markets are tanking. Prices are falling in New York, London, Shanghai and Istanbul, among others, the ranking showed.

Market observers say a decade of low interest rates helped push up the price of luxury housing around the world, and that process is now running out of steam.
Also, in our globalized economy, money from all around the world affects local house prices, and that’s especially true at the top end of the market. Increasingly, housing slowdowns are synchronized around the world.
But Vancouver’s housing market is showing signs of stabilizing, with sales up 24 per cent in July, compared to the same month a year earlier. Some observers say they’re seeing a pick-up in interest from foreign buyers, particularly among Hong Kong residents worried about the city’s escalating protests.

Tuesday, June 18, 2019

Ottawa to help first time buyers lower mortgage payments

A new federal program designed to help middle class families get on the housing ladder is being introduced while the previously announced Shared Equity Mortgage Provider Fund will launch next month.


The federal government has announced that the First-Time Home Buyer Incentive will reduce monthly mortgage payments for first-time buyers without increasing their down payment.
The incentive will allow eligible first-time homebuyers who have the minimum down payment for an insured mortgage with CMHC, Genworth or Canada Guaranty, to apply to finance a portion of their home purchase through a form of shared equity mortgage with the Government of Canada.
For existing homes, the incentive will be 5% while for new homes there will be a 5% or 10% option. The larger share available for new homes aims to boost housing supply.
The program will launch on September 2, 2019, with the first closing on November 1, 2019.
"The First Time Home-Buyer Incentive is designed to benefit those who need more assistance with housing costs, middle class Canadians. Thanks to mortgage payments that are more affordable, many families will have hundreds of dollars more each month in their pockets – money to spend on things like healthy food, sports activities for their kids, or even save for the future." said Bill Morneau, Minister of Finance.
The government has clarified that:
  • Doubling the incentive for purchasers of new homes encourages new housing supply.
  • No on-going repayments are required, the incentive is not interest bearing, and the borrower can repay the incentive at any time without a pre-payment penalty.
  • The government shares in the upside and downside of the change in the property value.
  • The buyer must repay the incentive after 25 years, or if the property is sold.
  • The incentive will be available to first-time homebuyers with qualified annual household incomes up to $120,000. At the same time, a participant's insured mortgage and the incentive amount cannot be greater than four times the participant's qualified annual household income.
"Through the National Housing Strategy, more middle-class Canadians - and people working hard to join it - will find safe, accessible and affordable homes. Our proposed measures will reduce the monthly mortgage for your first home by up to $286. This will mean more money in the pockets of Canadians and will help up to an estimated 100,000 families across Canada," added Jean-Yves Duclos, Minister of Families, Children and Social Development and Minister Responsible for Canada Mortgage and Housing Corporation.
Shared equity fund
As announced in Budget 2019, the government is also introducing the Shared Equity Mortgage Provider Fund, a five-year, $100-million lending fund to assist providers of shared equity mortgages to help eligible Canadians achieve affordable homeownership.
The fund will launch on July 31, 2019 and will be administered by CMHC. It will support an alternative homeownership model targeted at first-time homebuyers, help attract new providers of shared equity mortgages and encourage additional housing supply.
by Steve Randall18 Jun 2019 REP

Thursday, May 9, 2019

$5 billion laundered through B.C. real estate in 2018

by Canadian Press

by Dirk Meissner
An independent report has found that $5 billion was laundered through British Columbia's real estate market last year and increased the cost of buying a home by five per cent.
The report by former B.C. deputy attorney general Maureen Maloney estimated that $7.4 billion overall was laundered in B.C. in 2018, a figure she says is conservative and added the total amount across Canada was about $47 billion.
Attorney General David Eby told a news conference on Thursday that money laundering is a ``malignant cancer'' on society and a ``national-level crisis.''
The provincial government commissioned two reports last September to shed light on money laundering by organized crime in the province's expensive real estate market.
Former deputy RCMP commissioner Peter German says in his report that the infusion of illicit money into the B.C. economy led to a frenzy of buying that raised the assessed values of homes throughout much of Metro Vancouver.
German's report says there are thousands of specific properties worth billions at high risk for potential money laundering.
An international anti-money laundering agency said last year that organized criminals were laundering about $1 billion annually in the province.
But Maloney's report details far more cash was filtered.
"As a conservative estimate, we're looking at money laundering on the scale of $7.4 billion in 2018. That's just for B.C., let alone the rest of Canada,'' she said.
Eby said wealthy criminals and those trying to evade taxes have run out of the province for too long, to the point they're distorting the economy, hurting families looking for housing and impacting those who have lost loved once because of the opioid overdose crisis.
"I am under no illusions that the problems we face are unique to B.C.,'' said Eby.
Federal Organized Crime Reduction Minister Bill Blair said earlier that he and Eby have met several times this year and are working together to fight money laundering.
The reviews aimed to shed light on money laundering by organized crime in real estate after last June's report on dirty money in casinos by German.
Following the gaming report, German was appointed to conduct a second review to focus on identifying the scale and scope of illicit activity in the real estate market.
Eby said earlier this week he was shocked to hear some criminals laundering money through B.C.'s luxury car sector are getting provincial sales tax rebates.
The attorney general said the government will move to plug tax loopholes to prevent the vehicle tax rebate that cost the province almost $85-million dollars since 2013.
B.C. also tabled legislation aimed at preventing tax evasion and money laundering by shining a spotlight on anonymous real estate owners hiding behind shell and numbered companies.
Several regulatory and professional agencies anticipated the findings of the reports and put anti-money-laundering policies in place last month.
The B.C. Real Estate Council said it would be partnering with the federal Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, to identify and deter money laundering and terrorist financing in the industry.
The B.C. Real Estate Association, the body that serves 23,000 realtors in B.C., said in April that it would join with four other agencies to keep the proceeds of crime out of real estate.
The other participating organizations include the Appraisal Institute of Canada, BC Notaries Association, Canada Mortgage Brokers Association and the Real Estate Board of Greater Vancouver.
Each organization has committed to sharing information, accepting only verified funds and making anti-money laundering education mandatory for its agents.

The Canadian Press

Thursday, May 2, 2019

April another lethargic month for Metro Vancouver home sales: Real estate board

BY THE CANADIAN PRESS


VANCOUVER — Home sales remained sluggish across Metro Vancouver in April and real estate analysts slam government policies for the lack of activity.
The Real Estate Board of Greater Vancouver says residential home sales last month were 43.1 per cent below the 10-year April sales average.
Across the region, April sales totalled 1,829, a 29 per cent decrease compared with sales one year earlier, but the board says activity has edged up 5.9 per cent since March.
The listless market is also reflected in prices, with the board reporting the composite benchmark price for Metro Vancouver residential properties is currently $1,008,400, an 8.5 per cent year-over-year decrease, and a 0.3 per cent skid since March.
Real estate board president Ashley Smith blames government intervention for the tepid market.
She says the federally imposed mortgage stress test has reduced buyers’ purchasing power by about 20 per cent, causing entry-level buyers to struggle to secure financing.
“Suppressing housing activity through government policy not only reduces home sales, it harms the job market, economic growth and creates pent-up demand,” says Smith in a statement, adding that more homes are for sale in Metro Vancouver than at any time since October 2014.
“This trend is more about reduced demand than increased supply,” she says.
“The number of new listings coming on the market each month (is) consistent with our long-term averages. It’s the reduced sales activity that’s allowing listings to accumulate.”
Just over 14,000 homes are currently listed for sale in Metro Vancouver, which the board says is a 46 per cent increase in one year and a 12 per cent leap since the tally one month ago.
The sales-to-active listings ratio also saw a nearly one per cent slip since March, to its April setting of 12.7 per cent.
The calculation reflects the ratio between the number of homes sold and the number of new listings being added to the market. Broken down by property type, it stands at 9.4 per cent for detached homes, 15.4 per cent for townhomes and 15.3 per cent for condo apartments.
Analysts expect downward pressure on prices when the ratio dips below 12 per cent for several months, while home prices tend to climb when the ratio moves above 20 per cent.
The benchmark price in April for a detached home was $1,425,200, an 11.1 per cent drop in one year and a slip of 0.8 per cent compared with the setting one month earlier.
The benchmark price for a Metro Vancouver condo was $656,900, down 6.9 per cent from April of last year but unchanged since March 2019.
Townhome prices also didn’t budge month-to-month but the board says April’s benchmark of $783,300 is 7.5 per cent lower than it was in April of last year.


Tuesday, April 2, 2019

Prospective home buyers remain on the sidelines in March


Metro Vancouver home sales dipped to the lowest levels seen in March in more than three decades.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,727 in March 2019, a 31.4 per cent decrease from the 2,517 sales recorded in March 2018, and a 16.4 per cent increase from the 1,484 homes sold in February 2019.
Last month’s sales were 46.3 per cent below the 10-year March sales average and was the lowest total for the month since 1986.
“Housing demand today isn’t aligning with our growing economy and low unemployment rates. The market trends we’re seeing are largely policy induced,” Ashley Smith, REBGV president said. “For three years, governments at all levels have imposed new taxes and borrowing requirements on to the housing market.”
“What policymakers are failing to recognize is that demand-side measures don’t eliminate demand, they sideline potential home buyers in the short term. That demand is ultimately satisfied down the line because shelter needs don’t go away. Using public policy to delay local demand in the housing market just feeds disruptive cycles that have been so well-documented in our region.”
There were 4,949 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in March 2019. This represents an 11.2 per cent increase compared to the 4,450 homes listed in March 2018 and a 27.2 per cent increase compared to February 2019 when 3,892 homes were listed.
The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 12,774, a 52.4 per cent increase compared to March 2018 (8,380) and a 10.2 per cent increase compared to February 2019 (11,590).
For all property types, the sales-to-active listings ratio for March 2019 is 13.5 per cent. By property type, the ratio is 9.4 per cent for detached homes, 15.9 per cent for townhomes, and 17.2 per cent for apartments.
Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,011,200. This represents a 7.7 per cent decrease from March 2018, and a 0.5 per cent decrease compared to February 2019.
Sales of detached homes in March 2019 reached 529, a 26.7 per cent decrease from the 722 sales in March 2018. The benchmark price for a detached home is $1,437,100. This represents a 10.5 per cent decrease from March 2018, and a 0.4 per cent decrease compared to February 2019.
Sales of apartment homes reached 873 in March 2019, a 35.3 per cent decrease compared to the 1,349 sales in March 2018. The benchmark price of an apartment property is $656,900. This represents a 5.9 per cent decrease from March 2018, and a 0.5 per cent decrease compared to February 2019.
Attached home sales in March 2019 totalled 325, a 27.1 per cent decrease compared to the 446 sales in March 2018. The benchmark price of an attached home is $783,600. This represents a six per cent decrease from March 2018, and a 0.7 per cent decrease compared to February 2019.

copyright Real Estate Board of Greater Vancouver

Saturday, February 2, 2019

Toronto new home sales plunge to lowest in almost 20 years as unsold condos pile up

New home buyers finally reached their limit in Toronto last year.


After years of frenzied price increases, sales of new homes in Canada’s biggest city sunk to the lowest in almost two decades in 2018 and the supply of unsold condos piled up, according to a pair of new reports released Friday.
“Greater caution” should be taken when investing in new condo units, particularly over the short-term, as trends point toward slower appreciation, Shaun Hildebrand, president of condo research firm Urbanation, said in the report. The “market has started to normalize after unprecedented activity in recent years.”
Toronto’s housing market is dramatically cooling after higher interest rates and new mortgage regulations bite. The city joins other global metropolises such as London and Sydney seeing a slowdown as international investors retreat and domestic buyers balk at higher prices.
Single-family homes showed the biggest decline, plunging 50 per cent to 3,831 from 2017 and 74 per cent below the 10-year average. Condos sales fell 38 per cent to 21,330, but only 4 per cent below the 10-year average.
While the benchmark price of a new single-family home slumped 6.7 per cent to $1,143,505 in December on the year, condo prices surged 11 per cent to $796,815, according to BILD’s report.
But figures from Urbanation show further weakness building in condos as well. A record 21,991 units are expected to be completed this year, up 29 per cent from 2017. While 98 per cent of those units are pre-sold, more than half were bought by investors who will either rent their units or sell them, the firm said.
The number of unsold units in development jumped 47 per cent in the fourth quarter from the year before to more than a two-year high and price gains for units under development grew only 0.4 per cent between the third and fourth quarters, the smallest quarterly increase in almost three years.
“The slowdown in activity last year can partly be attributed to less demand from investors, who typically represent the largest component of new condominium purchasers,” in the Toronto region, according to Urbanation’s report.
“The market is out of balance,” said David Wilkes, president and chief executive officer of BILD, an industry group for about 1,500 companies in the Toronto region. “We join other industry groups in calling on the federal government to revisit the stress test and allow a longer amortization period for first-time buyers. And we look forward to working with our municipal partners on removing barriers to development such as excessive red tape and outdated bylaws.”
Bloomberg.com

Tuesday, January 8, 2019

Fraser Valley home sales hit 5-year-low last year

Home sales in the Fraser Valley have been above 20,000 for 3 consecutive years but that run was broken in 2018.
Fraser Valley Real Estate Board’s MLS saw 15,586 sales in 2018, down more than 30% from the previous year and the lowest total since 2013. The total dollar value of transactions was down almost $4 billion to $11.8 billion.
Board president John Barbisan says that the figures reflect a return to more normal activity for the market.
“There is still a great deal of interest for Fraser Valley real estate, but with prices moving slowly and more inventory becoming available, many consumers are taking a deliberate approach now that they can afford to,” he said.
New listings hit their fourth highest on record with 32,058 received by the Board’s MLS system in 2018. Barbisan says that sellers need to ensure correct pricing as buyers take control.
Fraser Valley home prices
At $965,300, the Benchmark price for a single family detached home in the Fraser Valley decreased 1.1% compared to November 2018 and decreased 1.5% compared to December 2017.
For townhomes, the benchmark of $531,900, was down 0.2% month-over-month but up 3.7% year-over-year.
The Benchmark price for apartments/condos decreased 1% month-over-month but increased 7.6% year-over-year to $418,300.

by Steve Randall
REP