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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

White Rock multi-family site sold for $7.12M

The 25-unit apartment building sold for $285,000 per suite

A 25-unit apartment building in White Rock has sold for $7.12 million, Macdonald Commercial Real Estate Services reports. 

The multi-family suite sold in an off-market transaction for $285,000 per suite, on October 30, 2018. The property has an assessed value of $5,485,000. The site is 22,000 square feet, with future redevelopment potential. 

The property is located at 1485 Fir St., White Rock. 

Breakdown: 

Price: $7,127,000

No. of Units: 25

Price/Unit: $285,000

Lot Size: 22,000 SF

Property Type: Multi-family 

Zoning: RM-2

2017 B.C. Assessment Value: $5,485,000

Date of Sale: 10/30/2018

City: White Rock    

Province: B.C. 

Stuart Wright Nick Goulet Macdonald Commercial Real Estate for Western Investor

November 14, 2018

Mortgage stress test could become election issue

The Conservative Party of Canada plans to make the mortgage stress test a hot button issue in time for next year’s election, but explaining such a convoluted issue to Canadians could pose a challenge.

The party’s Deputy Shadow Minister for Finance tabled two motions this year to study the impact of the stress test, known as B-20, but they were both rejected by the Liberals. Nevertheless, MP Tom Kmiec has vowed to put the mortgage stress test on the agenda in time for the Oct. 2019 federal election.

“It will be an election issue, absolutely,” said Kmiec. “I’m willing to use procedural tools to get this study done. I’m not necessarily saying to get rid of B-20 completely; I’m saying take a look at the data and then make a decision on it. I’m asking the Liberals to provide any internal documents they have showing why the mortgage rules were introduced in the first place.”

Kmiec has started a website to pressure the Liberals into studying B-20’s effects. He claims that he was initially told B-20 wouldn’t be examined in the absence of more data, however, much has since come to light about Canadians being shut out of the housing market.

Kmiec is dogged, to be sure. He participated in the electoral reform committee’s filibuster.

“If it comes down to it, I’m happy to use up every two-hour time limit on every single committee until we agree to do a mortgage study,” said Kmiec. “I’m not asking for the moon, either. All I want are a few meetings in Ottawa where we can invite people with data who can then tell us what’s happening with the market.”

But communicating the message will doubtless be challenging for the Conservatives. Ron Butler of Butler Mortgage can attest to how difficult buying homes has become this year, but too few Canadians have born that brunt for the impact to truly be understood.

However, given that mortgage renewals are subject to the same stringent B-20 qualification rules, Butler believes it is still possible to make Canadians understand how detrimental the stress test is.

“It won’t be hot button, but if it’s messaged right, it could be,” he said. “If it’s presented properly as a group of themes about the incompetence, in terms of the ability to handle the file—why has Mexico settled NAFTA already and Canada hasn’t? Why did we buy a pipeline that got shut down? It’s a good thing to add to the general list of incompetence. On its own, it isn’t a hot button issue, but if you want to weave it into a tapestry of every day, practical fiscal management, it could work.”

 

by Neil Sharma01 Oct 2018, www.canadianrealestatemagazine.ca

Vancouver council approves duplexes in most neighbourhoods

Decision came despite opposition from some residents

City council voted to allow duplexes in most single-family neighbourhoods in Vancouver in a 7-4 decision after a two-day contentious public hearing that ended Sept. 19.

NPA councillors George Affleck, Elizabeth Ball and Melissa De Genova, as well as the Green's Adriane Carr, voted against the proposal, which was considered one of the "quick start" actions in the city's new Making Room program that aims to increase housing diversity in Vancouver.

Council's decision means duplexes will be allowed with or without small lock-off suites. It's an option for new construction only, and it doesn't include an increase in floor area over what's currently permitted. Laneway houses also won't be allowed in conjunction with duplexes. City staff say they don't anticipate land value to escalate thanks to those restrictions.

The rationale for allowing duplexes wasn't based on affordability, although they will be cheaper than single-family homes. It's meant to increase housing options.

Before voting in favour of the proposal, Vision Vancouver mayor Gregor Robertson said the city needs more options between single-family and higher-density housing forms. He pointed out laneway homes and secondary suites were also controversial, but allowing them has worked out well.

"The big challenge that we have as a council is, in these neighbourhoods, we need to make decisions that are not just for the people who live in the neighbourhoods right now, but as Coun. [Raymond] Louie said, for the people who want to live there and who, hopefully, will be able to live there for many years to come," he said.

Coun. Andrea Reimer said despite complaints there wasn't enough consultation, a great deal took place through the Housing Vancouver strategy, which led to the Making Room program.

Reimer said the duplex proposal isn't a huge step, but it's a matter of justice to give less affluent residents hope that council will use "tiny tools" such as zoning to try and help meet their needs.

Coun. Raymond Louie said "if this is not gentle density, I don't know what this is because there is no extra density."

But De Genova argued consultation wasn't robust enough before she voted against the proposal.

"Zoning needs to be led by Vancouver's 22 neighbourhoods," she said.

Carr said she didn't see any evidence that the zoning change was important or needed.

"The real point is that we need to build affordable homes through different kinds of housing types than the ones that are aimed [at] the upper end of the income scale," she said.

Affleck took aim at Vision Vancouver in his remarks.

"After 10 years of Vision Vancouver leadership, this council has become renowned for lack of public consultation," he said. "If you tear this city apart to achieve these goals, you've not achieved much at all."

Ball said the sense of betrayal some residents feel won't be a good legacy for council, while Hector Bremner, who supported the proposal, questioned how duplexes could be an affront to democracy.

In comments before the vote, senior planner Paula Huber said staff anticipate there will be a shift away from building single-family dwellings to building duplexes. Currently, the city gets about 800 applications for new single-family homes a year. She expects half of that figure might flip to duplexes so there's the potential to produce 800 duplex units.

She estimated new East Side duplexes go for about $1.2 million, while West Side ones go for upwards of $2.5 million.

Duplexes will likely appeal to households earning $150,000 or more, according to Huber, which accounts for about 15.5 per cent of the city's households.

There are currently 283,000 dwelling units in the city, she added, 4,500 of which are duplexes, which translates to 1.6 per cent of the housing stock.

During the first day of the public hearing on Sept. 18, there was mixed reaction about the proposal, while on the second day the bulk of speakers raised objections, including Judy Graves, the city's former advocate for the homeless. Graves said she spent the past two decades moving First Nation families, immigrants, single parents and working class seniors, as well as other individuals, into suites across the city, which she now fears will be torn down in favour of duplexes.

She called for amendments to the proposal that would guarantee that displaced families would be relocated into suites in the same school district and that displaced seniors would also be relocated into their same neighbourhoods because elderly people aren't comfortable with change.

Other critics, meanwhile, outlined many of the same complaints lodged on the first day of the hearing, including the fact that councillors, most of whom aren't running for re-election, were making a decision that they won't be accountable for, that there wasn't nearly enough consultation, that many residents likely didn't even know the proposal was up for consideration since notices weren't sent to individual homes, that character homes will be knocked down, and that it will lead to land speculation by developers, worsening the affordability crisis.

Colleen Hardwick, an NPA candidate in the upcoming election, called the process fundamentally flawed.

"That you would even consider sweeping changes without due process is unconscionable. You need to listen to the people, and you have not."

Hardwick argued if council passed the rezoning it would be like "putting out a fire with gasoline. It will be a feeding frenzy."

Janice Wong said the changes contravened community plans, which undermines residents' faith in the process.

"The public must have meaningful input in the planning of their neighbourhoods," she said.

The city says its Housing Vancouver strategy, which was adopted in 2017, included consultation with more than 10,000 residents over 18 months. That process identified a desire for "missing middle" housing options across Vancouver, which led to the Making Room program, which was adopted in June. The program included the duplex proposal as a "quick start" action.

Four information sessions were held this month about the proposal.

The meetings were advertised in the newspaper, at community centres and libraries, and through a social media campaign. Email notices were also sent to neighbourhood organizations and individuals who had signed up for notifications through the Housing Vancouver process.

Individual notices were not sent to homes. The Vancouver Charter only requires the city to notify the public about rezoning proposals in the newspaper and at city hall.

For site-specific rezonings, the city notifies residents within a certain proximity directly, which goes beyond what's required by the Vancouver Charter. Residents are typically not directly notified for citywide rezoning proposals. That was also the case when laneway housing was introduced in single-family districts in 2009 and when additional density was added to single-family zones to allow secondary suites that same year.

Representatives from Abundant Housing Vancouver, who spoke in favour of the plan at the public hearing, were happy the duplex proposal passed but stressed it was a very small step.

"With all the work that the planning department put in, I would have been very disappointed if it didn't pass," Owen Brady told the Courier. "We've been saying it's a step in the right direction, but it's a very small step. I don't think any of the disaster scenarios are going to come true."

Stuart Smith agreed.

"It's just such a small thing that we are up in arms over the idea of simply allowing two families to share the same square footage that we currently require [single-family] homes to consume. The drama over this is crazy... This isn't any extra density and it was called an atomic bomb. What would you call it if the proposal was for a four-storey apartment? What would that be? Would that be the Death Star?" he said.

"So yes, it's a positive step. It's a positive step simply because it gives more options, more ways to live in Vancouver. Some people want duplexes, some people don't. That's fine. Some people want single-family homes, that's fine. You don't need to tell people how to live. It's one extra choice, so why not? There was a councillor, Geoff Meggs, who once said tiny homes are not the solution. And this is true, tiny homes are not the solution, but homes like that, and laneways, and duplexes, work for some people. We do not need to look for a housing typology that works for every single person in the population. We need to allow lots of different housing types that work for lots of different people."

 

Naoibh O’Connor Vancouver Courier
September 20, 2018
Westerninvestor.com

Commercial sales volumes down – except in multi-family market

Multi-family assets continue to be crowd favourite among investors, while sales in office and industrial properties slow due to limited supply

 

Sales volumes in nearly every commercial real estate sectors have declined in the second quarter of 2018 – though not for a lack of demand, according to a new report. 

The growing disconnect between supply and demand in Canadian real estate has lead to a decrease in sales velocity and an acceleration of lease rates, according to research by the Morguard Corporation

"A drop in transaction volume in the second quarter is very much a function of low product availability rather than a drop in demand," said Keith Reading, director of research at Morguard. "With quality office and industrial space at a premium, apartments are a crowd favourite as investors search for yield."

Office sales have dropped nearly 50 per cent across Canada year-over-year, while industrial volume has plunged 17.8 per cent. Meanwhile, multi-family sales increased 17.5 per cent.

Average sale prices for multi-family properties also increased year-over-year, from $8.5 million in the first half of 2017 to $13 million during the same period of 2018. 

Morguard expects investor sentiment in residential rental properties to remain strong into next term. 

 


 

 Tanya Commisso | Western Investor | July 18, 2018