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Housing market will reach a “convincing bottom” in Q3 says TD


Housing market easing on the mortgage front

Steve Randall
REP

The acute volatility of the Canadian housing market may be nearing the end.

The downturn in existing home sales in 2018, following a jump as the mortgage stress tests approached, have produced some dramatic declines but TD Economics believes things are easing.

“Fortunately, there is reason to believe that the worst of the adjustment is behind us. Monthly moves have become less dramatic, with some markets beginning to see modest increases,” a new multi-authored report says.

However, it will most likely be the third quarter of 2018 before the housing market reaches a “convincing bottom” the report says.

After that, the economists at TD see little chance of a significant resurgence due to rising interest rates, tighter mortgage rules, and weakened affordability.

With the Bank of Canada unlikely to introduce sharp rate rises, the TD Economics team expects a “gradual, well-telegraphed” tightening of monetary policy.

Households feeling the pinch of rate rises The report also highlights the pain that many Canadians are feeling from higher borrowing costs.

Canadian households are 30% more sensitive to rising borrowing costs than a decade ago. This is due to the level of household debt.

This is likely to mean a continued moderation of discretionary household spending, especially as oil and gas prices are trending higher.

Copyright © 2018 Key Media Pty Ltd



“Real estate agents will be obsolete in a few years.” claims tech chief


Virtual real estate buying and selling on the way

Steve Randall
Canadian Real Estate Wealth

The president and co-founder of a technology firm whose clients include Colliers International sees a bleak future for Canada’s real estate agents.

“We firmly believe that real estate agents will be obsolete in a few years. The internet has solved the information asymmetry problem faced by home-buyers,” says Voxel World’s Max Agrad.

His words won’t go down well with agents; and consumers might be less ready than Agrad believes to accept a homebuying experience without the expert advice and guidance an agent offers.

However, investors think that Agrad and his team are on the right track in serving a digital-native generation; Washington DC-based Voxel World has just secured U$2 million in first-round funding for its growing product range of virtual reality real estate tools.

“This first round of funding is a great vote of confidence from investors. The money injected by our investors will help us market our revolutionary products to real estate developers around the world,” Agrad says.

“Millennials are now buying their first homes and they are much harder to convince than their parents. They tend to do their homework prior to visiting properties. Also, they are much more open to using VR/AR Solutions,” says Agrad.

Copyright © 2018 Key Media Pty Ltd



Strata condo windups ‘creative’ Vancouver property investments


Factors in property investment slowdown

Evan Duggan
Business in Vancouver

The Metro Vancouver commercial property investment market is showing signs of slowing, according to a 2018 first quarter report by Altus Group.

Overall investment volumes across all asset classes fell by 22 per cent in the first quarter of this year when compared to same period last year, according to the report by Altus Group — a provider of independent advisory services, software and data solutions to the global commercial real estate industry.

Altus tracked a total of 480 deals in the first quarter, each worth more than $1 million, for a total of $2.9 billion.

Deals for land accounted for 57 per cent of the market, including a couple of unique strata dissolution deals which suggest investors and developers are seeking new ways to get a hold of land in the highly-competitive market.

“Pretty much every asset class was down from the previous quarter, but the land markets overall were down approximately 50 per cent from the previous quarter,” said Paul Richter, the director of data solutions for Altus Analytics. “The most significant land market was the residential land market.

“That slowed down [too], so it actually had its slowest quarter since Q4 2015.”

Factors in property investment slowdown

He said several factors are at play in the apparent slowdown in the Metro Vancouver commercial property market, including the cumulative effect of several government interventions in the market. Among those are the provincial government’s foreign buyer tax and Vancouver’s empty homes tax.

“I think that’s causing some pause in terms of land banking or investment in land for future redevelopment projects,” he told RENX in an interview.

He said investors who already hold land might be pushing pause “until they see which way the condo market might head as a result of some of those restrictions or taxes that governments have put in place.

“Also, we’ve had quite a number of fairly significant land transactions occur in the course of the last two years, and I think we’re starting to see the slowdown of easy-to-develop sites, and we’re getting more into creative land acquisitions or creative site acquisitions that require [more] planning,” Richter said.

Strata dissolution opens new development path

In 2016, the provincial government updated the Strata Property Act so a strata dissolution now requires only 80 per cent of owners to agree for the land and building to be sold. 

Richter pointed to two such recent deals.

In one case, a strata condo building called Garden Court at 1830 Alberni Street in Vancouver’s West End sold for $52 million after the strata corporation agreed to liquidate the 42-year-old building and lands, according to the Residential Land Transaction Summary provided by Richter.

A numbered company purchased the land and buildings, which were assessed at $21.7 million.

In a separate deal in North Vancouver, the 2.4-acre Lynnmour Village South Site was purchased for $31 million after a similar strata dissolution.

Constructed circa 1973, the property included 90 units in four buildings, according to the summary for that deal.

The strata decided to dissolve after a series of building reports showed the complex needed extensive repairs that proved to be financially unsustainable, the summary indicated.

The new applicant has proposed a high-density, multi-building development on the site. Woodbridge Northwest, listed as the purchaser of the site, did not reply to a request for comment.

“These older buildings are coming to an age where the owners of each of those individual strata units and the building may be facing levies to do capital work,” Richter said. “They have developers that are coming in and offering them market value to basically walk away.”

Two paths to strata redevelopment

He said these deals are taking two forms: 1) the strata corporations agree to dissolve themselves and then liquidate the property, or 2) developers individually purchase units so they can eventually take over 80 per cent of the building. “And then they can control the fate of the property,” he said.

Richter said more of these deals will start happening in Metro Vancouver.

“We’re currently tracking a handful already… where the developers are acquiring single strata units. We’re calling that a strata wind-up in progress,” he said. “We are seeing a handful of specific addresses where we’re watching developers pick up more and more [units] as the days and weeks go on.”

© 2018 Real Estate News Exchange



Strata condo windups ?creative? Vancouver property investments


Factors in property investment slowdown

Evan Duggan
Business in Vancouver

The Metro Vancouver commercial property investment market is showing signs of slowing, according to a 2018 first quarter report by Altus Group.

Overall investment volumes across all asset classes fell by 22 per cent in the first quarter of this year when compared to same period last year, according to the report by Altus Group — a provider of independent advisory services, software and data solutions to the global commercial real estate industry.

Altus tracked a total of 480 deals in the first quarter, each worth more than $1 million, for a total of $2.9 billion.

Deals for land accounted for 57 per cent of the market, including a couple of unique strata dissolution deals which suggest investors and developers are seeking new ways to get a hold of land in the highly-competitive market.

“Pretty much every asset class was down from the previous quarter, but the land markets overall were down approximately 50 per cent from the previous quarter,” said Paul Richter, the director of data solutions for Altus Analytics. “The most significant land market was the residential land market.

“That slowed down [too], so it actually had its slowest quarter since Q4 2015.”

Factors in property investment slowdown

He said several factors are at play in the apparent slowdown in the Metro Vancouver commercial property market, including the cumulative effect of several government interventions in the market. Among those are the provincial government’s foreign buyer tax and Vancouver’s empty homes tax.

“I think that’s causing some pause in terms of land banking or investment in land for future redevelopment projects,” he told RENX in an interview.

He said investors who already hold land might be pushing pause “until they see which way the condo market might head as a result of some of those restrictions or taxes that governments have put in place.

“Also, we’ve had quite a number of fairly significant land transactions occur in the course of the last two years, and I think we’re starting to see the slowdown of easy-to-develop sites, and we’re getting more into creative land acquisitions or creative site acquisitions that require [more] planning,” Richter said.

Strata dissolution opens new development path

In 2016, the provincial government updated the Strata Property Act so a strata dissolution now requires only 80 per cent of owners to agree for the land and building to be sold. 

Richter pointed to two such recent deals.

In one case, a strata condo building called Garden Court at 1830 Alberni Street in Vancouver’s West End sold for $52 million after the strata corporation agreed to liquidate the 42-year-old building and lands, according to the Residential Land Transaction Summary provided by Richter.

A numbered company purchased the land and buildings, which were assessed at $21.7 million.

In a separate deal in North Vancouver, the 2.4-acre Lynnmour Village South Site was purchased for $31 million after a similar strata dissolution.

Constructed circa 1973, the property included 90 units in four buildings, according to the summary for that deal.

The strata decided to dissolve after a series of building reports showed the complex needed extensive repairs that proved to be financially unsustainable, the summary indicated.

The new applicant has proposed a high-density, multi-building development on the site. Woodbridge Northwest, listed as the purchaser of the site, did not reply to a request for comment.

“These older buildings are coming to an age where the owners of each of those individual strata units and the building may be facing levies to do capital work,” Richter said. “They have developers that are coming in and offering them market value to basically walk away.”

Two paths to strata redevelopment

He said these deals are taking two forms: 1) the strata corporations agree to dissolve themselves and then liquidate the property, or 2) developers individually purchase units so they can eventually take over 80 per cent of the building. “And then they can control the fate of the property,” he said.

Richter said more of these deals will start happening in Metro Vancouver.

“We’re currently tracking a handful already… where the developers are acquiring single strata units. We’re calling that a strata wind-up in progress,” he said. “We are seeing a handful of specific addresses where we’re watching developers pick up more and more [units] as the days and weeks go on.”

© 2018 Real Estate News Exchange



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


Realtors concerned about government’s definition of what constitutes a conflict of interest

Frank O’Brien
Western Investor

A new real estate regulation came into force this week that British Columbia real estate agents say will take away the right of consumers to decide whom they can hire to buy or sell a home.

Changes to the B.C. Real Estate Services Act, effective Friday, June 15, prohibit “double ending” – representing both a buyer and a seller in a real estate transaction  – along with other strict regulatory changes.

The practice, known in the industry as limited dual agency, also includes agents representing two or more buyers vying for the same property, or rental agents representing both a landlord and a tenant. The ban on limited dual agency aims to avoid conflicts of interest when the agent is working on behalf of their client.

The new rules also may require agents to stop representing a client if other possible conflicts of interest occur. For example, if a potential buyer makes an offer on a property listed by an agent who has previously represented that buyer, the agent may have a conflict of interest and be required to refer the listing to another agent. This conflict could mean the listing agent potentially has confidential information about both the seller and the buyer.

The changes were to come in March, but the Office of the Superintendent of Real Estate postponed it after hearing “considerable concern from industry surrounding the implementation of the new rules and the impending implementation date.”

While tweaks were made, agents are concerned about a broad definition of what constitutes a conflict of interest.

“The new rules governing real estate practices mark a significant shift in how realtors in B.C. work with their clients,” said Darlene Hyde, CEO of the British Columbia Real Estate Association.

“It’s important that consumers know what to expect when the changes come into effect.”

The BCREA estimates that less than 5 per cent of residential transactions in the province involve a dual agency, but the June 15 ban on dual agency will affect every home sale in the province.

The Real Estate Council of British Columbia’s (RECBC) Independent Advisory Group advised the dual agency ban in 2016. This followed a handful of high-profile cases of realtor misconduct in Metro Vancouver’s white-hot housing market.

The connection flagged under the new rules need not be related to real estate; it could be any former social, business or community connection. In such instances, the realtor may be required to refer the seller to another agent.

“Say your mom and dad are selling their house and they choose an agent they trust to handle the sale,” said Michael La Prairie, owner of a Century 21 real estate franchise in Vancouver and president of the Real Estate Brokers’ Association. “Then a buyer comes in with another agent, but the buyer happens to know your parent’s agent, say from their church community.

“Under the new rules, the listing agent could be required to walk away from the listing.”

The RECBC, which is responsible for interpretation of the provincial legislation, leaves it to the agent to decide if a social connection represents a conflict.

“In those circumstances, it would be up to the real estate agent to apply professional judgment to consider whether the confidential information they received from their former client while acting as their agent would impair their ability to represent their seller client in the sale of the property,” the Council stated in an email.

Realtors are concerned that, if a transaction went bad, they could be exposed to liability simply because of the nature of the business, La Prairie said.

“Real estate is a relationship business,” he said. “Everyone knows each other.”

There are severe penalties for breaking the rules. Fines of up to $250,000 can be levied on individual agents, with brokerages liable for penalties of up to $500,000.

The BC Chamber of Commerce has passed a resolution asking for a postponement of implementation and a review, and 5,300 letters have been sent to the province in response to ads put out by the Real Estate Alliance of B.C., a lobby group against the changes, apparently to no avail.

The dual agency regulations follow a series of tax and regulatory amendments brought in by the provincial government this year, from the speculation tax to higher school taxes and an increase in the foreign buyer tax, that have left the industry reeling.

“My head is spinning with all the changes,” said Mark Goodman, a Vancouver agent with HQ Commercial.

“I feel like the NDP has given the industry a lobotomy.”

Commercial real estate agents are particularly concerned because the new legislation would prohibit an agent from selling a property to a potential buyer with whom they have had dealings in the past.

This is referred to as “double recusal,” meaning the agent could have confidential information about both the buyer and the seller.

That wouldn’t work in the tight-knit commercial real estate market, said Ron Emerson, a veteran commercial real estate agent with Cushman & Wakefield in Vancouver.

He said that, unlike the housing market, commercial real estate involves a much smaller group of buyers and sellers, and agents often deal with the same parties repeatedly.

© Copyright 2017 Western Investor



Vancouver officials push for vertical expansion to increase liveable space


City planners are shooting for rental-only zoning and affordable home ownership

Ephraim Vecina
Canadian Real Estate Wealth

This week, Vancouver city staff are slated to push new measures that would ensure greater liveable density in the market by encouraging further vertical expansion.

The raft of changes to be proposed to the city council on June 19 – dubbed by the staff as the “Making Room” strategy – include increasing the supply of duplexes and townhouses, approving taller laneway houses, and adding the number of 4-storey apartment buildings.

Proponents argued that “Making Room” will augment the existing 10-year housing plan that aims to increase the number of homes available to a wide range of incomes.

“We found in our investigation that much of the new supply generated in Vancouver since 2010 or 2012 has been very high end, and it’s really more of a result of investment of foreign and domestic capital,” Vancouver chief city planner Gil Kelley stated, as quoted by StarMetro Vancouver.

City planners are also shooting for rental-only zoning and affordable home ownership deals in Vancouver’s single-family enclaves, where properties valued at over $1 million are the norm. Officials expressed hope that such agreements can help moderate the speculation that is responsible for much of the price increases.

“We hear … that the city has way too much land area locked up in low-density zoning, and that needs to change in order to make room for people of different incomes,” senior planner Dan Garrison said. “That we focus too much of our affordable housing on arterial streets, and have retained too much of that land area in those nice, leafy neighbourhoods that’s largely only available to people with higher incomes.”

CMHC data showed that over the past 7 years, Vancouver has created more than 2,400 rental apartments — but the city will have to significantly pump up the pace of rental development to meet the targets set in the 10-year housing strategy.

Copyright © 2018 Key Media Pty Ltd