cmhc

Investor-driven condos forecasted to fill housing gap through 2021

According to a report from Central 1 Credit Union, Ontario’s housing market is forecasted to grow through 2021, and that includes the need for investor-driven condos in downtown Toronto.

“In higher urban markets, condos should remain a viable investment vehicle because there are a lot of people coming in who will need a roof over their heads,” said Central 1’s regional economist, Edgard Navarrete, the report’s author.

“Population growth is still at about trend, or even slightly above trend, over the next three years and that’s because, even though the housing market is at times relatively unaffordable in the region as a whole, the economy is still attracting a lot of people for work and to education institutions, particularly in urban centres.”

The supply of purpose-built rentals, townhomes and condo apartments has been on the rise throughout Ontario due to strong population growth. Navarrette added that Ontario’s population is forecasted to grow 1.7% this year, 1.7% next year, and 1.8% in 2021.

“With an influx of people coming in, there will be increased demand for condo apartments, townhomes and single-detached homes in secondary markets to meet that demand,” he said.

The Canada Mortgage and Housing Corporation’s First-Time Home Buyer Incentive, according to the Central 1 report, will help buyers gain entry into the housing market, but it may be short-lived as demand will likely result in bidding wars, thereby driving prices skyward.

“Part of the reason they put this in place is to help people get into higher-density housing, but, unfortunately, with the program starting in September the increased demand for entry-level condos will start raising the prices in that segment, and you can expect bidding wars,” said Navarrette.

Although Central 1’s report is, overall, optimistic, it warns of headwinds blowing from the U.S.-China tariff war.

“We’re also expecting the economy to slow down a bit over the next couple of years,” said Navarrette. “It won’t be below negative growth, but it will grow below trend because of our trading partners, not our economy. The U.S. has put in protectionist measures, which could slow down their economy, the global economy, and we’d be affected through trade channels, which will affect consumer confidence, business confidence, and business investment, as well as spending on big ticket items like cars.”

www.canadianrealestatemagazine.ca | by Neil Sharma | 24 Jul 2019

Market rental tower going up on Robson Street

Vancouver mayor welcomes pet-friendly West End highrise, citing need for market rental buildings

To emphasize that the new highrise being built at 1500 Robson St. will be pet friendly, two dogs — Hazel and Trink — made an appearance at the Feb. 20 ground breaking. They're pictured with (left to right) Mayor Kennedy Stewart, as well as Ralf Dost, Steve Marino and Jeff Fleming from GWL Realty Advisors.

It’s unusual to see a pair of dogs — in this case Hazel and Trink — at a press conference packed with developers, real estate types and politicians. But not when you’re trying to underscore the fact a new development will be pet friendly in a city where it's notoriously difficult to find an apartment that accepts animals.

That was the case Feb. 20 at a ground breaking for a 21-storey market rental building going up at 1500 Robson St. in Vancouver’s West End.

The pooches got a front-row seat to hear speakers, including Mayor Kennedy Stewart, praise the tower, which will produce 128 rental units, a third of which (42 units) will be two- and three-bedroom family-sized apartments ranging from 753 to 978 square feet.

London Life Insurance Company is the owner of the project, which is being developed by GWL Realty Advisors and designed by IBI Group

The tower is being built on Robson at Nicola Street and is expected to be completed in 2021. | Rendering IBI Group

The tower is being built on Robson at Nicola Street and is expected to be completed in 2021. | Rendering IBI Group

It’s one of the first rental towers to be built along Robson in decades, “in a city that’s in need of rental housing and in a neighbourhood of luxury condominiums,” according to GWL Realty, and the first rental project on Robson to be approved under the city’s West End Community Plan, which was adopted in 2014.

Ralf Dost, president of GWL Realty Advisors’ real estate portfolio, said it’s important to create more purpose-built rental apartments given Vancouver’s tight vacancy rate and the fact much of the existing stock is dated and in need of upgrades.

“We also know how challenging it is to make financial sense of multi-residential developments, especially in this West End neighbourhood, so all of these factors make the launch of this project today that much more gratifying,” he said.

Stewart agreed that increasing the supply of secured market rental apartments “is more important than ever” when more than 50 per cent of residents are renters and vacancy rates are at an all-time low.

“It’s the kind of ground-breaking we all like to come to because it is helping us with our key problem of [increasing] market rentals. We need all kinds of rentals in the city — we need affordable rentals, but market rentals are also a key part of fixing our supply problem,” he said, while adding that residents have also been pushing for the construction of units big enough for families.

“Increasing the supply as well as diversity of rental housing in our city will benefit all Vancouverites, especially young families. I used to rent right across the street so I know how vibrant this neighbourhood is, and bringing 128 more families in here is just going to really help the local merchants.”

The highrise, located at the corner of Robson and Nicola streets, is expected to be completed in 2021. It will feature “substantial” bicycle storage and maintenance facilities, as well as indoor and outdoor amenities, including fitness, yoga and lounge rooms, a rooftop patio and a common area for tenants on the penthouse floor.

It’s replacing a low-rise commercial building that used to face Robson, which featured a few residential units, as well as a residential building behind it that was mostly rented to international students. The 12 tenants who lived in the two buildings were relocated elsewhere with some assistance. GWL Realty Advisors provided tenants with the equivalent of two or more months’ rent based on length of tenancy, and support with moving expenses.

It’s too early to say what rents will be in the new building, but they will be at market rates.

The average rent for a bachelor suite in the West End was $1,254 in 2018, according to CMHC data, while a one-bedroom was $1,566, a two-bedroom was $2,330 and a three-bedroom was $3,368 — tough rates for the average Vancouverite to afford.

Stewart told the Courier the city is focused on ensuring both market and affordable rental units are created.

“We need rental for all income levels. I’m a renter. My wife and I are renters, and we can afford to live in market rental housing, and that’s what we live in. There’s lots of employment in this city that’s coming in where you have folks that have a higher income level that need this kind of housing too,” he said. “[While] our focus is going to be on making sure we maximize the number of the non-market housing units that we have built, we also have to encourage this kind of build... That’s why I’m here at this announcement today. [It's] because this kind of housing is also needed.”

When asked what he would say to West End residents who’ve complained the community plan bumped up land values so high that it’s pushing people out of the neighbourhood due to redevelopment, Kennedy said: “The West End area plan is full of protections for folks living there now and into the future, so we just have to make sure we get the balance right. It is these developers and these construction companies that are building all the housing in the city. We are living in a market economy. However, we have to do everything we can to incentivise non-market housing development and get the federal and provincial governments back into the housing game so they can help us provide much more affordable units. But the focus is on rentals of all levels here at the city.”


The 21-storey tower at 1500 Robson St. will feature 128 market rental units. Rendering IBI Group

The 21-storey tower at 1500 Robson St. will feature 128 market rental units. Rendering IBI Group

Naoibh O’Connor Vancouver CourierFebruary 20, 2019 | westerninvestor.com

Five hottest British Columbia news stories of 2018

Western Investor's most-read stories, from dual-agency regulation to new and expanded residential real estate taxes

During a year of major real estate policy and regulation change, it comes as no surprise that WesternInvestor.com’s most-viewed B.C. stories gave readers the insight into these new developments, including B.C’s foreign buyer tax, restrictions on assignment sales to prevent ‘shadow flipping’ and ‘ double-ending’. Readers also frequented the sight to get the lowdown on up-and-coming investment destinations.

Here is our annual countdown of our five most-read British Columbia stories published in 2018.

5. Mill town of Powell River becomes low-cost investment destination

Our first story to garner the most views this year focuses on the economic growth of Vancouver Island town Powell River, a los-cost alternative to the mainland with a 80.3 per cent increase in housing sales year-over-year. 

4. Dual agency rules will disrupt housing market, real estate agents claim

Changes to the B.C. Real Estate Services Act that came into effect June 15, 2018 prohibited "double ending" – representing both a buyer and a seller in a real estate transaction. In our story, real estate professionals worried it could slowdown sales – and as the year progressed, they may have had a point. 

3. China's largest online retailer to start selling Canadian real estate

This quick-hit story on Chinese real estate portal Juwai.com and retail site JD.com teaming up to offer Canadian real estate to Asian consumers garnered the third-most views this year, showing us that readers are still drawn to stories on foreign investment in Vancouver property. 

2. Higher-priced house markets nailed by tax hike

Our second-most read story of the year focused on the first effects on the housing market following the B.C. Budget 2018 housing measures announcement. Pricey markets like Vancouver’s west side were the first to fall, seeing prices down 70 per cent in April 2018 versus April 2016. 

1. Canada Revenue Agency recruited to help fight mortgage fraud

Our most-read story of the year covered the CRA’s recruitment to combating mortgage fraud together with the Canadian Mortgage and Housing Corporation, by allowing lender to have access to an applicant’s tax data. Together with numerous Bank of Canada interest rates this year, it’s no surprise that readers we’re reading and watching to see how new regulations would affect mortgage eligibility in a changing market. 

REMAX forecasts Canadian markets in 2019

According to the REMAX 2019 Housing Market Outlook, the country’s average sale prices will get a 1.7% boost, an indication that the balance has finally returned to Canada.

The report notes that markets throughout the country stabilized this year after the 2017 aberration that saw prices in markets like Toronto’s surge beyond reasonable levels. Stabilization is expected to continue through 2019, a likely consequence of interest rate hikes that are believed will increase as the year goes on.

Thirty-one percent of REMAX survey respondents don’t believe interest rates have hitherto affected their ability to afford a mortgage, but that optimism doesn’t extend beyond December. Another REMAX survey of its brokers and agents revealed 83% expect interest rates to make Canadians’ home purchases cumbersome next year.

The report also expects sale prices in Vancouver to decline 3% in 2019 because obtaining a mortgage in the Metro region is becoming well-nigh impossible.

"The drop in sales in key markets across British Columbia can be partially attributed to Canadians' increasing difficulty in getting an affordable mortgage in the region," says Elton Ash, REMAX of Western Canada’s regional executive vice president. "The situation created by the introduction of the mortgage stress test this year, as well as continually increasing interest rates, means more Canadians will be priced out of the market."

The Greater Toronto Area, on the other hand, is expected to fare better next year as REMAX predicts sale prices will rise 2%, thanks to high demand for homes priced below $1 million. Demand will be weaker for homes above $1.5m, though. According to Christopher Alexander, REMAX’s vice president and regional director for Ontario-Atlantic Region, looming rate hikes might be spurring the restraint.

“People are a little more cautious than they were in the past because interest rates are starting to rise,” he said. “Government said it would be more aggressive with interest rates and people are waiting to see how it will all shake out.”

Alexander added that Toronto remains a popular destination, which should balance out weaknesses in its market.

“It’s not surprising [November sales in the GTA] were down year-over-year, but because Toronto is such a big destination, both domestically and globally, there will be good pockets of the city that balance everything gout.”

by Neil Sharma12 Dec 2018 | www.canadianrealestatemagazine.ca

After a relatively sedate 2018, Toronto is heating up again

After exhibiting relatively modest performance for most of 2018 with the advent of stricter mortgage qualification rules, Toronto is seeing a resurgence in market competition once again.

The latest numbers from the city’s real estate professionals’ association indicated that the total number of active for-sale listings in the GTA saw a 9.8% year-over-year decrease in November, down to 16,420 units.

During the same time frame, the volume of new for-sale listings in the region shrank by 26.1%.

“New listings were actually down more than sales on a year-over-year basis in November,” TREB President Garry Bhaura said, as quoted by Bloomberg.

Read more: Toronto apartment inventory having trouble catching up with demand

“This suggests that, in many neighbourhoods, competition between buyers may have increased. Relatively tight market conditions over the past few months have provided the foundation for renewed price growth,” Bhaura added.

Average home sales price last month was $788,345, growing by 3.5% from the same time last year.

Meanwhile, total sales in November stood at at 6,251 completed deals, representing a 14.5% annual decline.

TREB stressed, however, that any year-over-year comparison should take into account that November 2017’s performance is “distorted” due to a large number of buyers rushing to beat the implementation of B-20 in January 2018.

www.canadianrealestatemagazine.ca
by Ephraim Vecina07 Dec 2018

New small-space flex offices push $1,000 a square foot

Metro’s high-tech sector driving demand for new office-industrial strata projects

New light industrial/office strata projects springing up from Mount Pleasant to East Vancouver may have tapped into a profitable path, despite per-square-foot prices ranging from $800 to $1,000.

The most recent manifestations include a four-storey project on Yukon Street at West 6th Avenue – formerly the 3 Vets outdoor store – by Chard Development, which bought the site last year for $20.4 million.

Now under development, the 49,000-square-foot Yukon project will feature a high-ceiling ground floor for light industrial, with bay access for trucks, capped by three floors of stylish office space.

Chard recognized a demand for smaller office sizes from the area’s tech, finance and retail services industries. As a result, Yukon will feature smaller unit sizes (1,000 to 5,000 square feet) to adapt to this new Vancouver real estate reality, according to Byron Chard, Chard’s principal and CFO.

A similar Chard project at 34 West 7th Avenue sold out all 48,000 square feet while still under construction.

Nothing has pre-sold yet at the Yukon, where strata space starts at $1,000 per square foot.

The building will include a freight elevator, bike lockers, showers and 83 parking stalls, and it could prove popular, according to the type of high-tech tenant Chard is targeting. Completion is expected in 2020.

“I can definitely see the demand,” said Dogu Taskiran, a partner and founder at Stambol Studios, a virtual-reality startup that concentrates on the real estate market.

Taskiran said the Mount Pleasant location and ample parking would be among the draws.

Stambol is currently splitting 2,000 square feet of space in False Creek Flats, where the total monthly rent is $3,000, which Taskiran described as “a very good deal, very cheap.”

Chard noted that a startup could buy office or industrial space at Yukon and lease out part of it until it expands, but he expects most of the buyers will be sole owner-occupiers.

“Our goal is to make the space as flexible as possible,” he said.

Alliance Partners is trying the same concept in East Vancouver with a five-storey, 55,000-square-foot light industrial/office strata project on Clark Drive at Adanac Street.

Kevin Kassautzki, vice-president at Avison Young, which is handling sales of the project, expects per-square-foot prices to be in the $700 range for industrial space and $800 for offices.

“I think this area is on its way to becoming the next Mount Pleasant,” Kassautzki said.

There is an appetite for buying strata office space from larger players in the tech community, Taskiran said, but he added that Stambol and other startups often prefer to lease. A common theme, he said, is to stay out of the downtown, where higher lease rates and a lack of parking are considered obstacles.

Frank O’Brien | Western Investor
November 21, 2018

CMHC releases Sept. housing starts data

The annual pace of Canadian housing starts fell to their lowest level in nearly two years in September.

Canada Mortgage and Housing Corp. says the seasonally adjusted annual rate came in at 188,683 units last month, down from 198,843 in August.

Thomson Reuters Eikon says economists had expected an annual rate of 210,000 for September.

September marks the third straight monthly decline.

The slowdown in the pace of housing starts comes amid rising interest rates from the Bank of Canada, and more restrictive mortgage rules.

``The September housing starts report fits with the relative calm and return to normality in sales, market balance and price growth that we are seeing across most of the country this year, in particular Toronto, following speculative excesses in Southern Ontario earlier last year and a moderate correction in response to policy measures earlier this year,'' wrote Sal Guatieri, a senior economist with BMO Capital Markets, in a note.

``Demand continues to be supported by the fastest population growth in 27 years and new millennial-led households. A calmer housing market is just what the doctor ordered, and won't discourage the Bank of Canada from raising rates on Oct. 24.''

CMHC says the pace of urban starts fell by 5.9 per cent to 175,653 units. The slowdown was dragged down by an 8.9 per cent drop to 122,656 units in urban multiple-unit projects such as condos, apartments and townhouses. Single-detached urban starts increased by two per cent to 52,997.

Rural starts were estimated at a seasonally adjusted annual rate of 13,030 units, while the six-month moving average of the monthly seasonally adjusted annual rates was 207,768 for September, down from 213,966 in August.

British Columbia led the declines with a drop of 43.3 per cent due to stiffer mortgage rules and growing lack of affordability, particularly in the Greater Vancouver area. Alberta also saw a drop of 34.8 per cent, amid a weakening in the oil-producing economies.

Meanwhile, Ontario housing starts increased 21.3 per cent, led by Toronto condos and Quebec was up 15.4 per cent.

 

The Canadian Press