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Real Estate News
June 02, 2020
Metro Vancouver homes sales decline in May, but prices are as high as ever
Home sales in the Greater Vancouver area continued their steep year-over-year drop last month, amid confinement measures and physical distancing requirements related to the COVID-19 pandemic.
The Real Estate Board of Greater Vancouver said Tuesday home sales totalled 1,485 in May, a nearly 44 per cent decrease from May 2019 and 54 per cent below the 10-year average for the month.
However, the figures marked a notable increase from 1,109 home sales in April, the lowest total for the month since 1982.
Board chairwoman Colette Gerber said buyers and sellers are becoming more comfortable navigating physical distancing hurdles, with virtual interactions more prominent than ever.
Bank of Canada cutes rate again
Bank of Canada cuts rate
March 13, 2020
The Bank of Canada has made an unexpected rate cut, cutting the central bank’s benchmark interest rate by 50 basis points to 0.75 per cent.
The central bank already cut its rate to 1.25 per cent at a previously scheduled meeting on March 4 to help counteract the impact of the coronavirus. Friday’s decision takes that one step further.
“This unscheduled rate decision is a proactive measure taken in light of the negative shocks to Canada’s economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices,” the bank said.
Bank of Canada follows Fed with rate cut as virus fears mount
March 04, 2020
The Bank of Canada cut half a percentage point from its benchmark interest rate Wednesday, easing monetary policy for the first time in more than four years as it followed the Federal Reserve in trying to protect its economy from the coronavirus.
The central bank lowered its overnight rate to 1.25 per cent from 1.75 per cent and said the spread of the coronavirus represents a “material negative shock” to the Canadian and global outlooks. Officials said they’ll act again to reduce rates if necessary.
“Governing council stands ready to adjust monetary policy further if required to support economic growth and keep inflation on target,” policy makers said in a statement, adding the move is part of a global response to the crisis.
The cut marks a reversal for Governor Stephen Poloz, whose prolonged resistance to lowering borrowing costs left the country with the highest policy rate among advanced economies. His position became increasingly untenable with the rout in global equities on concern the spread of the coronavirus could touch off a worldwide slowdown.
Policy makers were quick to highlight why a 50-basis-point cut, the first since the 2008-2009 recession, was necessary, saying “the outlook is clearly weaker now than it was in January.” Poloz is due to speak Thursday in Toronto to provide insight into the decision. The bank’s next meeting is April 15.
The virus has driven economic activity down sharply in some regions, disrupted supply chains, pulled down commodity prices and prompted a repricing of risk that has tightened financial conditions, policy makers said, warning the situation could worsen.
Feb 18, 2020
Morneau unveils new insured mortgage stress test rate
Finance Minister Bill Morneau announced changes Tuesday to the “stress test” rate for insured mortgages.
The new benchmark rate — the minimum rate a customer has to pay to qualify for insured mortgages — will be set at the weekly median five-year fixed insured mortgage rate from insurance applications, plus two per cent, according to a release from the Department of Finance Canada. The new rate will come into effect April 6, the Department of Finance said.
“The government will continue to monitor the housing market and make changes as appropriate. Reviewing the stress test ensures it is responsive to market conditions,” Morneau said in the release.
The change follows a review by the Office of the Superintendent of Financial Institutions (OSFI) conducted in January. The review concluded the minimum qualifying rate should better reflect changes in the housing market.
In a mandate letter addressed to Morneau in December, following the Liberals’ second-term election victory, Prime Minister Justin Trudeau tasked the finance department with considering recommendations from financial agencies in order to make the borrower stress test “more dynamic.”
In 2016, the Department of Finance said that insured mortgages must qualify for mortgage insurance at an interest rate which is either the greater of their contract mortgage rate or the Bank of Canada’s conventional five-year fixed posted rate. However, in its review of the housing market, OSFI stated that the Bank of Canada’s five-year rates are no longer moving in line with actual contract rates from banks.
“The gap has widened to exceed two per cent on a sustained basis, suggesting a less responsive floor than originally intended,” OSFI said in a release on Tuesday.
For now, the change applies only to insured mortgages. OSFI announced Tuesday is it considering the change in determining what the benchmark rate should be for uninsured mortgages. The regulator said it is seeking input from stakeholders on this proposal before March 17.
Feb 04, 2020
Home sale activity up, supply down to start 2020
Home sale and price activity remained steady in Metro Vancouver to start 2020 while home listing activity declined in January.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,571 in January 2020, a 42.4 per cent increase from the 1,103 sales recorded in January 2019, and a 22.1 per cent decrease from the 2,016 homes sold in December 2019.
Last month’s sales were 7.3 per cent below the 10-year January sales average.
“We’ve begun 2020 with steady home buyer demand that tracks close to the region’s long-term average,” Ashley Smith, REBGV president said. “Looking at supply, we’re seeing fewer homes listed for sale than is typical for this time of year. As we approach the traditionally more active spring market, we’ll keep a close eye on supply to see if the number of homes being listed is keeping pace with demand.”
There were 3,872 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in January 2020. This represents a 20.1 per cent decrease compared to the 4,848 homes listed in January 2019 and a 143.8 per cent increase compared to December 2019 when 1,588 homes were listed.
Last month’s new listings were 17.4 per cent below January’s 10-year average.The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 8,617, a 20.3 per cent decrease compared to January 2019 (10,808) and a 0.2 per cent increase compared to December 2019 (8,603), and is 13.7 per cent below the 10-year January average.
For all property types, the sales-to-active listings ratio for January 2020 is 18.2 per cent. By property type, the ratio is 11.6 per cent for detached homes, 22.6 per cent for townhomes, and 23.9 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 $1,008,700. This represents a 1.2 per cent decrease over January 2019, a 1.4 per cent increase over the past six months, and a 0.8 per cent increase compared to December 2019.
Sales of detached homes in January 2020 reached 439, a 29.5 per cent increase from the 339 detached sales recorded in January 2019. The benchmark price for detached properties is $1,431,200. This represents a 1.7 per cent decrease from January 2019, a one per cent increase over the past six months, and a 0.5 per cent increase compared to December 2019.
Sales of apartment homes reached 814 in January 2020, a 45.6 per cent increase compared to the 559 sales in January 2019. The benchmark price of an apartment property is $663,200. This represents a one per cent decrease from January 2019, a 1.5 per cent increase over the past six months, and a one per cent increase compared to December 2019.
Attached home sales in January 2020 totalled 318, a 55.1 per cent increase compared to the 205 sales in January 2019. The benchmark price of an attached unit is $782,500. This represents a 0.7 per cent decrease from January 2019, a 1.6 per cent increase over the past six months, and a 0.5 per cent increase compared to December 2019.
Jan 22, 2020
Bank of Canada keeps rates on hold, trims growth forecast for 2020
The Bank of Canada held interest rates steady at a meeting Wednesday but expressed heightened concern about an economy that has slowed more than expected, suggesting officials are becoming less confident in a year-long holding pattern.
While the Ottawa-based central bank kept its policy rate unchanged at 1.75 per cent for a 10th-straight decision, it acknowledged the domestic weakness at the end of last year is already spilling over into 2020, and could even persist. They also raised estimates of slack in the economy and dropped language about the current rate being appropriate.
The comments are a departure from recent communications in which officials sought to accentuate the positives of an economy they said was resilient in the face of global uncertainty. While Wednesday’s decision still leaves the Bank of Canada with the highest policy rate among major advanced economies, markets may interpret the statement as an attempt to at the very least open the door for a future move.
“In determining the future path for the Bank’s policy interest rate, Governing Council will be watching closely to see if the recent slowdown in growth is more persistent than forecast,” policy makers led by Governor Stephen Poloz said in the statement. “In assessing incoming data, the Bank will be paying particular attention to developments in consumer spending, the housing market, and business investment.”
Jan 10, 2020
Metro Vancouver saw record levels of housing starts in 2019, suggesting the market is “finding its footing” after a period of declining sales and falling prices, according to reports Thursday.
Canada Mortgage and Housing (CMHC) reported that Metro saw developers start construction on 28,141 new homes in 2019, up 20 per cent from 2018, with a substantial number of those, some 6,727, purpose-built rental units.
The CMHC report came out on the same day that Royal LePage released its latest house-price survey showing that aggregate home prices across the region declined 4.8 per cent in the fourth quarter of 2019 but in a market showing signs of recovering sales.
Royal LePage found that the condo markets in West Vancouver and North Vancouver were the only segments to see prices rise in the fourth quarter, by 6.3 per cent and 3.3 per cent, respectively.
And it was condo housing starts across the region that saw the biggest boost in construction, albeit with a “recalibration” of pricing levels, according to CMHC analyst Eric Bond.
“There is demand, strong demand for homes in price ranges that can be reasonably purchased by people based on their local incomes,” Bond said. “That’s where sales have been the strongest. The market is finding its footing again and developers are taking that longer-term view that, ‘I’m building for 2021, 2022.’ ”
And the record starts for 2019, which Bond said exceed the last record set in 2016 by about 200 units, brought the total number of housing units under construction in Metro to 46,000, another record.
“What that means is everyone is busy building,” Bond said, leading to constraints on the availability of materials, equipment and labour for building, which will help keep a lid on growth in housing starts over the next two years.
However, the sheer number of homes being completed over the coming years, particularly condos, might also bring an additional dampening effect to either prices or rents, according to University of B.C. academic Tom Davidoff.
“I think completions (of units) are very good for the resale market and the rental market,” said Davidoff, director of the UBC centre for urban economics and real estate at the Sauder School of Business. “A lot of the buyers are investors, so I think we’ve seen a slowdown at least in the rate of growth in rents in the last year.”
However, the news of increased construction comes at the same time that sales have increased in the market for existing homes, which has others estimating the prices have at least stopped declining. Royal LePage tracked declining prices across Metro in the last three months of 2019 with the median price of a standard two-storey home falling 4.7 per cent to $1.4 million. The median price on condos fell six per cent to $645,607 over the same period.
Inventories are also declining at the same time that sales have increased, said Randy Ryalls, general manager of Royal LePage Sterling Realty in Port Moody, which is “a good sign of recovery on the horizon.”
“I think the correction is over,” Ryalls said. “I don’t see anything lining up to say that prices are going to fall.”
At the same time, the dramatic decreases in property prices have happened more at the high end of the market among homes priced over $2 million. Townhouses in the suburbs that were priced in the $700,000-$800,000 range, however, didn’t see corrections as steep.
“I don’t think anybody would look at Vancouver’s market and say, ‘Oh, OK, it’s affordable now,’ ” Ryalls said.
Davidoff said some people hoped that the market downturn, influenced by the federal mortgage stress test and provincial foreign-buyers tax would help make Metro’s market more affordable.
“I think we’ve learned that just getting rid of outside demand is not going to get us all the way to affordability,” Davidoff said.
Dec 10, 2019
The B.C. government has announced it is raising the Speculation and Vacancy Tax on Dec. 31 from 0.5 per cent to two per cent for foreign owners and for satellite families, the majority of whose income is not reported on a Canadian tax return.
Some new exemptions to the tax will be brought in while others currently in place will be phased out.
“When we introduced the Speculation and Vacancy Tax, our province was at the peak of a real estate crisis and moderation in the market was long overdue,” said Finance Minister Carole James.
Based on the data collected from the first year, the government says the tax is working as it was designed to — capturing speculators, foreign owners and people who own vacant homes.
The next phase of the tax brings:
The exemption for empty strata properties in buildings where rentals are banned will be phased out by Dec. 31, 2021.
A strata title allows individual ownership of part of a property — generally either an apartment or townhouse — with shared ownership in the remainder of the building.
Under the new rules announced Tuesday, if the strata lot remains unoccupied, even if the building’s bylaws prohibit rentals, the tax will be levied.
VANCOUVER—The real estate industry sees the start of a recovery for British Columbia’s battered housing market, but for some realtors and developers, the pain continues.
In a forecast released Thursday, the British Columbia Real Estate Association said it expected sales to “normalize” by 2020. The number of residential home sales is expected to fall 5 per cent in 2019, before rising 11 per cent above that forecast in 2020. The association is expecting prices to fall by an average of 2.4 per cent this year but is forecasting a 3-per-cent price increase in 2020.
On the ground in Vancouver, where sales and prices have been dropping for a little over a year, it’s a story of delayed projects and slashed prices.
One example is Vinson House in West Vancouver, an infill project that includes four homes on one single-family lot.
Michael Geller, the architect and developer behind the project, told Star Vancouver in April he was “desperate” to sell the project, which had been sitting on the market for months. One of the three-bedroom units recently sold at $1.7 million, reduced from an initial asking price of $2.59 million, according to MLS records.
Geller declined to comment on the Vinson House development for this story but said another similar project, Major Rush Mews, is coming to market in two weeks. Geller said he was thinking of creative ways to sell the project, such as trying to identify a large extended family who might like to buy the homes together.
“Hopefully on Rush Mews, I’ll break even,” Geller said.
MLA Canada, a condo marketing firm, has tracked 17 delayed condo projects in the Metro Vancouver area, totalling 6,000 units of housing. Developers have postponed the pre-sales launch date for those projects to 2020 in hopes of finding more favourable market conditions, according to MLA’s mid-year market report for 2019.
Oct 24, 2018
The cost of loans linked to the big bank prime rates are headed higher in the wake of the Bank of Canada’s decision to raise its key interest rate target by a quarter of a percentage point.
The Royal Bank of Canada, Bank of Montreal, CIBC and TD Canada Trust said they are raising their prime rates by a quarter of a percentage point in the wake of the central bank decision.
The big four Canadian banks each raised their prime lending rates to 3.95 per cent from 3.70 per cent, effective Thursday.
The increase raises the cost of loans with interest rates linked to the prime rate such as variable-rate mortgages and home equity lines of credit.
The Bank of Canada raised its key interest rate target by a quarter of a percentage point to 1.75 per cent.
September 18, 2018
Vancouver city council has voted 7-4 in favour to allow duplexes in 99 per cent of the city’s low-density, single-family areas.
It was a move closely watched because allowing for duplexes is seen as a nod to a “quick-start action” that will pave the way for later allowing triplexes and multi-unit buildings in single-family neighbourhoods and is part of a broader program to increase housing options across the city.
Vision Coun. Kerry Jang cast it as a “polemical debate” between “those who fear change and people saying they need a place to live.”
It was the last major decision for Vision Vancouver, a party that has ruled for a decade, but will have no real power in the next term.
City hall veterans in Vancouver have long described changing single-family neighbourhoods as an issue that is basically to be avoided or untouchable because it can only lead to political ruin.
“There’s no doubt the idea of massive, blanket rezoning of single-family areas is very much a third rail. … There has always been something about keeping the sanctity of single-family zoning,” said former six-term councillor Gordon Price, heading into the evening portion of last night’s public hearing and ahead of knowing the evening’s outcome.
April 18, 2018
The Bank of Canada decided to keep its benchmark interest rate right where it is on Wednesday, but warned of rate hikes to come as inflation heats up.
The target for the overnight rate stays at 1.25 per cent. The central bank’s rate impacts rates that Canadians get from retail banks for savings accounts and debt such as mortgages and lines of credit
February 20, 2018
BC budget includes new real estate taxes and spending commitments
Housing was the dominant issue in today’s provincial budget.
The government released a 30-point housing strategy aimed at reducing housing demand, curbing tax fraud, building affordable housing, and increasing security for renters.
New tax measures include increasing property taxes and property transfer taxes on residential properties valued above $3 million, expanding the foreign buyer tax, and implementing a housing speculation tax.
“We welcome the provincial government’s commitment to address money laundering concerns and increase the supply of affordable, social, and rental housing in our province,” Jill Oudil, Board president said. “We’re concerned, however, about the series of tax measures announced today. The budget introduces new taxes, hints at future taxes, and hikes existing taxes on housing. Taxes don’t make homes more affordable.”
Below is a summary of the key real estate measures announced today. There’s considerable information to go through. We’re analyzing each item to understand the implications to you and your clients and will report back with more information and analysis in future communications.
Foreign buyer tax
Property Transfer Tax
Effective Feb. 21, 2018, the Property Transfer Tax on residential properties above $3 million will increase to five per cent from three per cent.
Provincial School Tax
Beginning in 2019, the provincial school tax will increase on most residential properties in excess of $3 million.
Database on pre-sale condo assignments
The province will require developers to collect and report comprehensive information about the assignment of pre-sale condo purchases. The information will be reported to a designated government office and shared with federal and provincial tax authorities to ensure taxes are paid.
Online accommodation PST and MRDT
Online accommodation platforms are enabled to collect and remit the Provincial Sales Tax and Municipal and Regional District Tax (Hotel Room Tax).
Property tax treatment for ALR land
As part of the Agricultural Land Reserve (ALR) review, the province is examining residential land in the ALR to ensure land is used for farming.
Clarity of property ownership
Compelling access to MLS®
The province plans to enable tax administrators to compel access to information relevant to property transfers, such as information held in a MLS® database. (We’re asking government for clarification.)
Beneficial land ownership registry
The province will require additional information about beneficial ownership on the PTT form.
Administered by the LTSA, the information will be publicly available and shared with federal and provincial tax and law enforcement authorities. Legislation will be introduced to require BC corporations to hold accurate and up to date information on beneficial owners in their own record offices available to law enforcement, tax and other authorities.
Task force on money laundering and tax evasion
The province will work with the federal government to formalize a multi-agency working group on tax evasion, money laundering and housing.
Residential Tenancy Branch
Increased funding to the Residential Tenancy Branch to reduce wait time, improve service and deal with disputes more quickly, as well as strengthening the Residential Tenancy Act and the penalties for those who repeatedly break the law.
Jan 18, 2018
Canada’s biggest lenders have raised their prime lending rates on the same day the country’s central bank moved its benchmark interest rate a quarter percentage point higher.
The Bank of Canada raised its key lending rate by a quarter point to 1.25 per cent Wednesday morning, the third time it has moved its benchmark rate from once-record lows last summer.
The bank rate has an impact what Canadians pay lenders for things like mortgages and personal loans. While the move means borrowers can expect to pay more, savers can expect to earn more, too, on savings accounts and guaranteed investment certificates.
That’s exactly what happened later on Wednesday afternoon, when Canada’s five biggest banks — Royal, TD, CIBC, BMO and Scotiabank — all hiked their own prime lending rates by a quarter percentage point, effective tomorrow.
As of Thursday, Jan. 18, all five now have the same prime lending rate of 3.45 per cent. Prior to the Bank of Canada’s move, their rates were all 3.2 per cent.
The central bank was widely expected to raise its rate after data in recent months showed gross domestic product growing, the job market healthy and the cost of living ticking higher.
The bank’s benchmark rate is now at its highest level since 2009.
- Interest rates are about to go up — no, for real this time
In the MPR, the bank nudged up its expectations for how the economy will perform this year and next. The bank now expects Canada’s economy to expand by 2.2 per cent this year and 1.6 per cent in 2019. Previously the bank was anticipating 2.1 and 1.5 per cent growth.