Victoria city hall is reflected in the glass of the mixed-use development at 1515 Douglas St. | Adrian Lam, Times Colonist
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.
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.
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.
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.
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.
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.
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.
“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.
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.
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
More than 900 housing units started this year in Langford, triple the amount of the next closest municipality
DB Services Victoria is so busy building rental projects in Langford that it turns away new projects every month, says the company’s director of development.
Workers pour footings for the Arc, a 93-unit rental building at the corner of Bryn Maur Road and Hockley Avenue. August 2018 — ADRIAN LAM
The Langford-based firm is one of the developers supporting the West Shore’s building boom, where rental apartments, condominiums and single-family houses are under construction.
In the first seven months of this year, 911 housing units were started in Langford, far outpacing other Greater Victoria municipalities. Saanich followed with a distant 284 housing-unit starts.
So far this year, 2,185 homes have been started in the capital region, up from 1,913 for the same seven months in 2017, according to Canada Mortgage and Housing Corp.’s latest report.
And every CMHC report shows strong construction in the West Shore, where the population is growing and where councils say they are committed to an efficient approval system.
“We have been turning away work for about two years here. We have five years worth of work lined up on the books right now. It’s all rental stock,” said Matthew McKay, partner with his mother Margaret McKay and with Gary Lahnsteiner, in DB Services.
DB Services is building three rental projects in Langford. It builds and owns about one-third of its projects, with the rest constructed for clients. The Arc, at 2849 Bryn Maur Rd., is being built for a client. The six-storey, wood-frame building will have 93 units. “We just poured our first footing there today,” McKay said Thursday.
The Arc is next to Hockley Corners, 765 Hockley Ave., which will have 63 units and be owned by DB Services. It is the first residential building on Vancouver Island to be built with cross-laminated timber, although some local institutional buildings have used that product, he said. It replaces a traditional floor system.
“We erected today pretty much our whole floor system,” at Hockley Corners, McKay said. That work would normally take five days and require more workers.
Prefabricated cross-laminated timber floor panels, supported on glue-laminated timber and parallel strand lumber columns, were used in the University of B.C.’s 18-storey Brock Commons student residence, which opened in 2016.
DB Services’ third under-construction project is the 11-storey, steel-and-concrete Danbrook One, which will have 90 units in the core of Langford.
The company only builds rental. That type of housing is in demand in the growing West Shore and financing is easier to obtain with rental developments, because it is not conditional on presales, as with condominiums, McKay said.
In June, the company finished the 63-unit Peatt Commons Phase One, at 2854 Peatt Rd. “Before we even turned it over to the client it was fully rented,” he said.
Despite the year-to-date climb in housing starts, the 417 starts in July was lower than the 695 in the same month last year, CMHC said.
Month-to-month housing starts numbers can vary significantly depending on timing of projects. Longer-term figures reveal a more accurate picture of the state of housing construction.
The number of Greater Victoria homes under construction — some projects can take two years to complete — stood at 4,731 as of July, CMHC said.
As well, the value of building permits, which signal builders’ plans, has climbed.
The value of building permits in the region was $160.4 million in June, up by 29.5 per cent from June 2017 when the value was $123.8 million, Statistics Canada said in its monthly report.
June of this year was up by 9.2 per cent from May, when permit values reached $146.9 million.
“It is definitely the residential market that is driving some of our bigger numbers with the permit data. It’s continuing to demonstrate that it is a strong market,” said Rory Kulmala, chief executive of the Vancouver Island Construction Association.
Greater Victoria’s low rental vacancy rate is one factor driving market demand for more housing, he said. “I think we are seeing that in a lot of communities on Vancouver Island.”
Carla Wilson Times Colonist, August 10, 2018, Westerninvestor.com