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:
An exemption for property owners who are members of the Canadian Armed Forces while in active service and their spouses.
An exemption for people who own properties which are only accessible by water.
An end on Dec. 31, 2019, to the exemption for foreign owners of vacant land.
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.
- Bank of Canada raises rate to 1.75%, signals more hikes to come
- Bank of Canada raises rates: Read the official statement
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