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Q&A with Kijiji?s head of real estate

Justin da Rosa
Canadian Real Estate Wealth

Your potential clients are increasingly turning to Kijiji to find their next rental. We spoke to the popular website about which markets are the most desirable, and which may provide the best bang for your buck in the future.
Kijiji Real Estate receives more than 4 million monthly unique visitors, according to Comscore. It examined apartment/condo for rent listing data for all of 2015 and 2016 to examine trends in listing supply, pricing and time to rent within all of our Canadian markets.  Kijiji currently has over 395,000 live listings in its Real Estate channel, of which, over 83,000 listings are Apartments/Condos for rent.
Canadian Real Estate Wealth spoke with Al Maitland, Head of Real Estate at Kijiji, about what the listings website has learned by crunching that data.
CREW: As we know, the rental market in Canada has experienced quite a roller coaster in 2016. What are some trends Kijiji saw in the Canadian real estate market in 2016?
Al Maitland: Let’s look at three key areas: supply of rental apartments, time to rent (how long a Kijiji-listed apartment remains available) and price.
We’ve seen significant changes in supply, in differing ways across the country. Supply in Ontario and Quebec declined significantly in 2016. Conversely, in the prairies, supply increased sharply early last year but tapered off in late 2016, and the market has begun to stabilize. The B.C. market transformed from a growing supply of apartments early in the year to negative supply towards the end, possibly due to foreign ownership rule changes leading to previous investment properties being sold to occupants instead of continued rental arrangements.
Time to rent remained fairly flat in most markets last year, including Ontario, Quebec and the prairies. However, it fluctuated significantly in B.C., again likely as an impact of the new foreign ownership rules.
Prices were up, down or the same, depending on where you were in Canada in 2016. The prairies saw prices fall between 5 and 10 per cent. Prices were fairly flat in Ontario and Quebec, staying within 3 per cent. And in B.C., prices rose in 2016, reflecting the lack of supply and landlords trying to pass new ownership rule price impacts along to tenants.
CREW: Which markets experienced a high/low in rental listings?
AM: Based on responses to ads for rental units, the busiest markets were Ontario (up 25 per cent compared to 2015), Quebec (up 26 per cent) and the Territories (up 27 per cent). In terms of cities, Toronto had the highest spike (up 29 per cent year over year) followed by Montreal (up 23 per cent).
On the low side, the prairies were pretty flat with only a 3 per cent increase in ad responses in 2016 compared to the previous year. B.C. was slightly stronger but not by much, with a 5 per cent increase. Among cities, Calgary saw a significant drop, down 8 per cent compared to 2015. Vancouver was off 5 per cent, and Edmonton declined by 2 per cent.

Copyright © 2017 Key Media Pty Ltd

First-time buyers need genuine help, not coddling – analyst

Ephraim Vecina
Canadian Real Estate Wealth

Contrary to fears that the CMHC’s mortgage insurance premium hike earlier this week will make purchasing more difficult for hopeful home owners, a long-time industry analyst argued that the CMHC decision is a valuable first step towards making the national housing market more accommodating towards this consumer class.

In his January 17 column for The Globe and Mail, markets observer Rob Carrick characterized the real estate industry’s response to the hike—which increased premiums on the mortgage default insurance that home buyers have to service if they put in less than 20 per cent for down payment—as an attempt to pander to first-time buyers.

“Expect this increase to be added to the grievance list of people who work in the real estate-industrial complex – agents and mortgage brokers, plus others who make a living from home sales. They are working hard to portray first-time buyers as martyrs to government policies designed to cool down the housing market,” Carrick wrote.

“But these measures are not just necessary – they may also help to make houses more affordable by containing price increases or causing them to fall,” he added. “CMHC is increasing premiums to boost funds available in case there’s an economic shock of some sort and mortgage defaults soar. High house prices increase this risk because people must stretch their finances to get into the market and then afford the full array of costs as a homeowner.”

Provincial governments have not been immune to misguided responses, as well.

“Ontario is offering a limited break on land-transfer tax, while the B.C. government is offering loans to first-time buyers to help them put together a down payment on homes costing up to $750,000,” Carrick explained. “Measures like these incrementally support more home buying, which in turns pushes prices higher. Worse, we end up helping people get into the market while ignoring the much more important question of how they’ll be able to afford their mortgage over the long term.”

Carrick concluded that the government, and not the industry’s self-interest, is better situated to effectively deal with the long-running affordability crisis.

“The wrong approach is to offer cosmetic, politically expedient help to young buyers that fails to address the reality that it’s way more of a burden to own a house than it is to buy one.”

Copyright © 2017 Key Media Pty Ltd

Trump effect: US searches for Canadian real estate surge

Steve Randall
Canadian Real Estate Wealth

There has been a surge of interest in Canadian real estate from south of the border following Donald Trump’s election as US president.

A report from real estate brokerage Royal LePage reveals that searches on its portal from the US increased 329 per cent on the day after the election and in the week following there was a 210 per cent year-over-year rise.

For the whole of November, American’s eyeing a move to Canada increased more than 70 per cent compared to the same month of 2015 and there was a 40 per cent increase for the whole of the fourth quarter.

“Always a desirable destination for migrants, Canada’s attractiveness as a country for international relocation has surged this decade,” said Phil Soper, president and chief executive officer, Royal LePage. “The United States was already a top source for immigration into Canada, and now in the period following the recent U.S. election, we are witnessing a material bump in American interest in Canadian real estate.”

Ontario, British Columbia and Quebec are the most searched regions for potential homebuyers from the US. While some of the search increase is for commercial property, residential searches accounted for three quarters of the total.

“Given America’s vast population, even a fractional increase in the number of households following through on this initial interest and successfully completing the demanding process of emigrating to Canada could drive a material increase in the number of home-buyers from south of the border,” concluded Soper. “Our federal government is seriously considering increasing the quota of new Canadians welcomed from abroad, and with the high value of the U.S. dollar increasing Americans’ purchasing power, we may be seeing more moving trucks with U.S. license plates in our future.”

Copyright © 2017 Key Media Pty Ltd

Extend foreign buyer home tax to capital region, two Victoria councillors urge

Bill Cleverley
The Province

VICTORIA — Two Victoria councillors want the 15 per cent provincial property transfer tax on foreign buyers applied in the capital region, and say local municipalities should be given the authority to impose a tax on vacant properties.

Councillors Ben Isitt and Jeremy Loveday hope their council colleagues will support asking the Capital Regional District board to throw its weight behind the changes. Revenue from the foreign buyer tax — a measure introduced in Metro Vancouver last summer —should be used to invest in affordable housing, they say.

“We’re definitely hearing from the public that there’s substantial concern around escalating prices for residential real estate and also real concern about affordable home ownership being out of reach for more and more families,” Isitt said.

“When you look at the escalating price of land, it has an impact both on renters as well as on people hoping to be homeowners.”

Loveday said there are a number of Victoria properties that have “lots of vacant units in them.

The two are are not proposing immediate implementation of a tax on vacant properties, but rather the authority to levy such a tax if warranted by the data, Loveday said.

Isitt said they want Victoria city council to forward the issue to the CRD because it would be good policy to apply such taxes regionally.

If the resolution makes it to the CRD table, there’s no guarantee it would pass.

The Victoria Real Estate Board says predictions that foreign buyers would flock to Victoria after the tax was imposed in Vancouver have not materialized.

According to the board’s latest numbers, the percentage of property transfers involving foreign buyers in Victoria went from 3.9 per cent in June-August, before the tax was implemented in Metro Vancouver, to 4.6 per cent in November.

Oak Bay Mayor Nils Jensen said he would want to see “an up-to-date analysis” on what impact the tax has had on the Vancouver market before making a decision.

“Now that there is a track record of approximately six months, the first step is to see how it has affected prices and impacted the Vancouver market generally,” Jensen said.

Langford Mayor Stew Young said there’s no way he would support a foreign buyer tax, and urged caution about imposing a tax on vacant properties.

Young said he views the tax on foreign buyers “a modern-day head tax” contrary to his belief in the free market.

“I just fundamentally don’t agree with it,” Young said. “I think for people who own a house, government should stay away from that. We’re already over-taxed.”

Esquimalt Mayor and Capital Regional District chair Barb Desjardins is also opposed to the idea.

“I have been watching what’s been going on in Vancouver, and I think it has had significant effects that I don’t think they really understood fully would be encountered,” Desjardins said.

“I tend to support [the idea] that the market will correct itself —and we’re already seeing that. So I would hesitate in implementing a policy that really kind of got brought in on the fly.”

© Copyright Times Colonist

Call for housing affordability task force

Steve Randall
Canadian Real Estate Wealth

The government in Ontario should establish a housing affordability task force to tackle the increasing barriers for first-time buyers, the province’s real estate body says.

“We are facing a critical housing supply shortage that is putting home ownership out of reach for Ontario’s first-time buyers and young families,” said Valerie Miles, Ontario Real Estate Association Government Relations Committee Chair. “In some markets, housing inventory is at all-time lows and prices are at record highs. Increasing the housing stock is necessary to give buyers more options at affordable levels. We need industry leaders to come together on this issue before the supply problem gets any worse.”

The association has made several recommendations to the government including cutting red tape surrounding building permits and zoning.

OREA CEO Tim Hudak says the benefits to boosting affordability of housing is far-reaching.

“Every home transaction generates $55,000 in economic spin-offs which creates jobs and supports local business, while home ownership offers endless social benefits for families and communities. If the goal of the pre-budget consultation is to build up Ontario’s future, then finding ways to make home ownership affordable is a great place to start.”

Copyright © 2017 Key Media Pty Ltd

Manage your risk by carefully scrutinizing depreciation reports

Focus on future costs as well

Tony Gioventu
The Province

Dear Tony:

Our situation is something every first-time homebuyer should be aware of. 

We purchased into an older four-floor wood-frame apartment building in Richmond in September 2016. At the time, we were aware of a new roof being planned from the contingency fund, but nothing else was disclosed in the minutes of the strata meetings or as an immediate issue in the depreciation report. 

What we didn’t realize at the time is that the depreciation report was written by a volunteer and did not include an assessment of all the building components. We purchased the unit because it had three bedrooms and was affordable in our budget. However, buyer beware. 

Older affordable homes are not necessarily a bargain, as we discovered. We are now facing a $37,000 special levy for major exterior repairs, and that is just the beginning.

Brad and Margaret M.

Dear Brad and Margaret:

Buying a new home, whether a condo or detached house, is often charged with nothing but enticement and it’s exciting the day we sign the papers for our first home. 

Because we are so intent on purchasing a first home, we are unwilling to look at the disadvantages that may discourage our purchase. As buyers, we are often willing to accept information as reliable on face value without closely scrutinizing the source, reliability of the ters and whether the information is relevant or dated. 

The strata corporation provided you with a depreciation report attached to your Form B information certificate. It was the obligation of the strata corporation to ensure the report met the requirements of the Strata Property Act and Regulations. If the strata failed to provide you with a reliable report, you may have a valid claim against the strata corporation for the undisclosed liabilities (the additional repairs it was hiding). As a result, you may want to file a claim through the Civil Resolution Tribunal for damages against the strata corporation for the undisclosed projected repairs.

There are three conditions in depreciation reports I always double check. Who was the writer and their qualification? Is the writer insured for the purpose of providing a depreciation report? And lastly, I check a summary of the common property/assets and their projected renewal dates. 

I am surprised at how frequently the summary of common assets omits critical items, like an elevator or pipe replacement. Even if the strata is planning for a new elevator, there is no authority to remove it from the report as it only exposes the owners in the strata corporation to a possible claim from a buyer.  

The B.C. Home Partnership Interest Free loan program launched this week is a great opportunity for new homebuyers to get into the market and build equity into their future, but buyers still have to manage their risks. Newer buildings will generally have predictable fees for the first one to 10 years of operations, but as building components age, maintenance and renewal cycles will increase. 

No investment is 100 per cent secure. Before you buy, try to set a date and value to the next major repair the property will experience and whether you can pay the levy. If the plan is for a new roof in 2018 and the cost is $200,000, how will the strata pay the cost?  Are there enough reserves to cover the new roof or will it be special levies? If there are special levies, do you know what your share will be? Apply this test to all know future costs and then make your decision. 

© 2017 Postmedia Network Inc.