GTA housing market activity muted in February

Ephraim Vecina
CMP

New report shows substantial declines in sales numbers la

The Greater Toronto Area (GTA) new home market saw sales activity decline by 76% annually in February, down to a level 69% lower than the region’s 10-year average, according to Altus Group and the Building Industry and Land Development Association.

The market saw a total of 922 new home sales last month, the second lowest number of new homes sold in February since tracking began in 2000.

“Only 225 single-family homes, including detached, linked, and semi-detached houses and townhouses (excluding stacked townhouses), were sold in February, down 65% from February 2022 and 81% below the 10-year average,” the market report stated. “It was the lowest level of single-family home sales for February since Altus Group began tracking.”

Condo sales totalled 697 units, which was 78% lower annually and 61% lower than the 10-year average for the asset class.

Total inventory saw its highest levels in more that two years, at 14,621 units. Among these are 13,031 condo apartment units and 1,590 single-family units, representing 9.3 months and 5.2 months of inventory, respectively.

“Builders have been ramping up inventory, particularly in the new condominium apartment sector, in anticipation of a stronger spring market,” said Edward Jegg, research manager at Altus Group. “As we move into spring, it appears that we may be seeing the floor in the market, which may overcome buyers’ recent hesitancy brought about by the run-up of interest rates and other economic concerns.”

“Housing inventory has been rising, which represents an opportunity for some new home buyers,” added Dave Wilkes, president and CEO of BILD. “But it would be a mistake to assume that we have overcome the structural challenges that hamper housing supply in the GTA. All levels of government must work with industry to implement the changes necessary to meet the ambitious goal of building 1.5 million new homes in a decade.”

Benchmark prices stood at around $1.759 million for new single-family homes (down by 5.4% annually) and at around $1.113 million for new condo apartments (down by 5.5%).

Copyright © 1996-2023 KM Business Information Canada Ltd.

What does the US Fed’s latest rate hike mean for Canada?

Ephraim Vecina
CMP

Sustained financial volatility will continue to influence policy on both sides of the border

The United States Federal Reserve has announced another 0.25% increase in its key interest rate despite widespread concern surrounding the impact of ever-higher borrowing rates.

“The US banking system is sound and resilient,” the Fed said, while stressing that sustained financial volatility – particularly in the wake of the Silicon Valley Bank and Signature Bank collapses – remains “likely to result in tighter credit conditions” and “weigh on economic activity, hiring and inflation.”

“The process of getting inflation back down to 2% has a long way to go and is likely to be bumpy,” Fed chair Jerome Powell said, as reported by the Associated Press.

The decision marked a more dovish hike than analysts had expected at the beginning of this month, although it was still a more aggressive move than the Bank of Canada’s latest announcement.

While the Canadian central bank’s latest decision on March 8 froze its benchmark interest rate at 4.5%, the institution will continue to seek more evidence of the rate’s cooling impact on inflation levels, BoC senior deputy governor Carolyn Rogers said.

“If strong wage growth isn’t accompanied by strong productivity growth, it will be hard to get to 2% inflation,” Rogers said. “Well, we noted that [recent data] showed labour productivity in Canada fell for a third straight quarter, so productivity isn’t trending in the right direction so far.”

Rogers emphasized that the current pause remains subject to change if future economic trends don’t go as planned.

BMO chief economist Doug Porter recently told Canadian Mortgage Professional that it is in the BoC’s best interest to continue closely monitoring policy developments south of the border.

“The reality is that does complicate matters somewhat for the [BoC],” Porter said. “[It] can deviate a bit from the Fed, but there are limits to how far away from US policy the Canadian policy can get without causing some pretty serious damage to the Canadian dollar.”

Copyright © 1996-2023 KM Business Information Canada Ltd.

Comment: City change to Broadway Plan will slow pace of rental housing

Mark Goodman and Cynthia Jagger
Western Investor

Vancouver staff recommendation to allow only five new development proposals per year flies in the face of earlier plans – and the city’s desperate need for more rental units

Mark Goodman and Cynthia Jagger are partners in Goodman Commercial Inc., Vancouver, and specialists in the multi-family rental sector. | Submitted

One of the City of Vancouver’s most important rental districts has a vacancy rate of just 0.5 per cent – a negative result of our citywide crisis of housing affordability. On March 29th, Vancouver Council will consider a new policy to address the “pace of change” in the Broadway area. Regrettably, City bureaucrats are recommending a slowdown on the provision of new rental housing when every indicator points to a strong need for acceleration.

Here’s the scoop.

Pressure has been building in the Broadway corridor for half a decade or more. That area is already considered Vancouver’s “second downtown,” with the highest concentration of employers and rental homes outside the city centre. Municipal, federal, and provincial governments have also been spending billions of dollars to upgrade transit with the new subway extension. That represents an enormous commitment from every level of government and an indication that this area is a regional priority for development and intensification.

Instead of encouraging the development of new housing in this corridor, so much-needed rental would be ready when the subway extension opens in 2026, the City launched an extensive public consultation for a new Broadway Area Plan many years ago and imposed a de facto moratorium in 2018. To be fair, it’s an important area; it made sense to proceed thoughtfully, but these actions have consequences, including the increased shortage of available options for renters today.

Through the planning process, even as the City halted all but a few exceptional projects, staff and previous Council continued making decisions that eroded feasibility and made development more difficult.

Then, last year when the Broadway Plan was finally voted through, the last council immediately acted to delay its implementation, sending staff away with a long list of new requests, including a policy on what might be an appropriate “pace of change.”

Not ‘how fast’ but ‘how slow’

City staff recently presented the first recommendations from their pace-of-change review, and it appears the question they were addressing was not, “How fast?” It was, “How slow?”

One might opine that caution was understandable – the 500 city blocks within the Broadway Plan contain a huge number of the city’s older, more-affordable rental apartments. It could be a problem if most of those buildings were redeveloped at once, causing the dislocation of tenants, some of whom may find it difficult to find alternative accommodations at a rate they could afford. That, presumably, was the rationale for the Tenant Relocation Plan, which then-mayor Kennedy Stewart described as the strongest in Canada when it was implemented last year.

That plan forces anyone redeveloping an existing rental building to find temporary homes for every tenant (topping up their rent if necessary) and then welcoming those same tenants back into brand-new buildings at their old rent once the project is completed. That’s an incredibly good deal for tenants, and one that will drive up project costs, compromise project feasibility, and slow the pace on its own.

With this new protection in place, however, it’s unclear why City staff are also proposing an obstructionist new “pace of change” policy with a recommendation to allow only five new proposals per year. We are just recovering from an effective, five-year moratorium, during which demand built up to the degree that City staff say they now have 100 rezoning enquiry applications on file, with an estimated 50 of these in existing rental zones. On one hand, that should be fantastic news. It represents thousands of new homes, perhaps tens of thousands of jobs, millions in new taxes and an appropriate private-sector investment to match (and make worthwhile) the tri-government SkyTrain infrastructure upgrade. A supportive administration might seize this influx as an opportunity to fight for greater housing availability while addressing crucial social issues like climate change.

Of course, it isn’t that simple. Even if Council gets out of its own way, these new projects are unlikely to proceed at the pace that we need – or that anyone in the neighbourhood will find overwhelming. Interest rates and uncertainty are up, and a huge number of complicated and time-consuming City restrictions, conditions and charges still apply. Developers will move cautiously in a landscape that continues to increase in complexity and expense.

To review, Vancouver has a critical rental shortage.

Canada Mortgage and Housing Corp. data shows a citywide vacancy rate of 0.9 per cent in purpose-built rental, a full point below the national rate of 1.9 per cent, which is the lowest since 2001. Meanwhile, just released population figures from Statistics Canada show population grew by over 1.1 million nationally in 2022, the highest increase on record, including close to 150,000 new residents in B.C.. Extrapolating from those numbers, RBC economists are warning that the rental housing shortage will quadruple in the next three years without a significant boost in stock. Renters, already desperate, need new supply. And homebuilders in B.C. who are ready and willing to assist, can’t help if the City continues to block new construction, only to protect a small number who already have an apartment.

Perhaps the pace of change will be affected by the winds of change. New Mayor Ken Sim and the members of his ABC council majority campaigned on removing red tape at City Hall and getting these processes moving. This is their opportunity to make good on that promise. The need is extreme, renters are protected. It’s time to decide: will we have change with pace, or years more of frustration, restriction, and housing cost inflation?

We’re cautiously optimistic.

­ Mark Goodman and Cynthia Jagger are partners in Goodman Commercial Inc., Vancouver.

© 2023 Western Investor

B.C. approves $3 billion Cedar LNG project

Nelson Bennett
Western Investor

Floating liquefied national gas export terminal at Kitimat will be the first LNG plant to be built and owned by a First Nation

Artist’s rendering of the floating LNG project in Kitimat. | Cedar LNG

A $3 billion floating liquefied natural gas plant that the Haisla First Nation and Pembina Pipelines plan to build in Kitimat got the green light from the provincial government Tuesday, March 14.

The project completed an environmental review in mid-November under a provincial-federal substitution process, with the BC Environmental Assessment Office conducting the review. The project will still need the federal Environment minister’s approval.

The Cedar LNG project will be the first LNG plant to be built and owned by a First Nation. The Haisla’s industry partner is Pembina Pipelines.

“Today is not just about the approval of an LNG facility,” said Haisla Chief Crystal Smith. “Today is about changing the course of history for my nation and indigenous peoples everywhere.”

“While it took longer than expected, we are pleased to see the B.C. government move forward on this project,” said John Desjarlais, chairman of the Indigenous Resources Network. “Cedar LNG is a first of its kind with an Indigenous proponent driving the project forward.”
The project’s approval was announced Tuesday in conjunction with a new “energy action framework” that the province unveiled to try to fit energy into B.C.’s climate change plan.

It includes an emissions cap for B.C.’s oil and gas sector and requirements for new LNG projects to have “a credible plan to achieve net-zero emissions by 2030 in order to proceed through the environmental assessment process.”

The project is being designed as a floating LNG terminal, which has a relatively small land footprint, and as it will be largely powered by clean hydro electricity, it will also have a comparatively small carbon footprint.

“All of this means that the project will be among the lowest emitting and most environmentally conscious LNG facilities in the world,” said B.C. Environment Minister George Heyman.

An initial project description estimated the project will require 169 megawatts (MW) to 179 MW of power.

For perspective, BC Hydro’s  Site C project will provide 1,100 MW and generate about 5,100 gigawatt hours of energy each year when it goes online in 2024.

Cedar LNG will  export three million tonnes per annum (MPTA) of liquefied natural gas, requiring one LNG carrier moving up and down Douglas Channel every seven to 10 days.

By contrast, the larger, neighbouring LNG Canada project would produce 13 MPTA in its first phase, and up to 26 MPTA, if a second phase expansion is approved and sanctioned by the LNG partners.

 ARC Resources announced March 14  that it will provide the natural gas and liquefaction of half of Cedar LNG’s total production — 1.5 million tonnes annually.

When the Haisla negotiated a benefits agreement with LNG Canada, it secured a natural gas offtake agreement with the associated Coastal GasLink pipeline, so all that is needed in terms of a pipeline is a connector line.

Following a green light from both the provincial and federal governments, Pembina Pipelines has said it expects to make a final investment decision in 2023, with a four-year construction period and a seven- to nine-month commissioning to begin in mid-2027. 

Construction was expected to start in the second half of this year, with peak activity in the spring of 2024 through 2025. The project is expected to employ up to 500 workers during peak construction.

© 2023 Western Investor

B.C. Premier David Eby approves $479-million TransLink bailout

David Carrigg
The Vancouver Sun

Mobility pricing next, say B.C. Liberals

Premier David Eby announces a bailout for TransLink on Wednesday, March 15, 2023, in Vancouver. Photo by Herman Thind /jpg

The provincial government will give TransLink almost half a billion dollars to prevent service cuts, keep fares stable and fund the purchase of electric buses.

The announcement came two weeks after a similar amount was promised to B.C. Ferries to also prevent service cuts, keep fares stable and buy electric ferries.

B.C. Premier David Eby said the $479 million TransLink grant was needed to address the bus, SeaBus and West Coast Express provider’s “urgent financial needs.”

Last month, the TransLink Mayors Council on Regional Transportation called on the federal and provincial governments to give TransLink $500 million in “emergency relief transit funding” to offset the financial impacts of reduced demand due to COVID-19 and to help cover TransLink’s $20 billion 10-year expansion plan.

The $20 billion plan includes doubling bus service, adding nine new Rapid Bus Transit lines and expanding transportation infrastructure — including extending SkyTrain to the University of B.C. and building a gondola to Simon Fraser University.

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TransLink’s operating budget is being hammered by reduced ridership thanks to COVID-19, inflation and reduced gas tax revenue as people work from home or switch to electric cars.

The transit provider believes it will recover completely and that demand will grow over the next decade due to population growth.

“Hundreds of thousands of people rely on TransLink’s service every day to get to work, travel to school, and access all parts of the region,” said Eby. “Failing to act now would lead to higher fares, fewer buses on the road and reduced service across the board. We won’t let that happen.”

The money will be used to “stabilize the transportation authority’s finances,” help pay for 115 new electric buses and increase service on existing routes.

This is latest in a series of big spending announcements by Eby.

Since last November, Eby has spent around $2.1 billion of a $5.7 billion unexpected surplus that must be apportioned by the end of March. Anything left over will be applied to provincial debt.

Most of the surplus was due to a one-time federal government adjustment to the provincial share of personal income and corporate tax revenues from prior years.

The spending announcements include a $1 billion municipal infrastructure fund, $500 million for B.C. Ferries, $500 million in affordability tax credits, B.C. Hydro and ICBC rebates and a $500 million rental protection fund.

Canadian Taxpayers Association B.C. director Carson Binda said federal and provincial governments had now given TransLink more than $1.3 billion in pandemic-related relief.

Trevor Halford, B.C. Liberal party Opposition critic for transit, said the TransLink payout was for operational uses and that it was not sustainable.

“This is for operational costs. What about next year?”

He believes the B.C. NDP are moving toward a mobility pricing model that would penalize car drivers because they would pay more.

“I am very concerned that the premier was asked to clarify their position on mobility pricing and they wouldn’t,” Halford said.

He said TransLink should be able to cut costs internally.

TransLink’s net direct debt was $4 billion last year, so at an average interest rate of five per cent the annual interest payment was $200 million.

The transit provider said it needed to borrow an additional $300 million in 2023. It’s not known if any of the $479 million announced on Wednesday will go toward covering that $300 million requirement.

© 2022 Vancouver Sun

Penticton 31-unit multi-family rental sells for $7 million

Western Investor Staff
Western Investor

Selling price was $100,000 above list, with assumable Canada Mortgage and Housing Corp.-insured financing at 1.73 per cent.

Marcus & Millichap, Vancouver, for Western Investor

Property type: Multi-family rental

Location: 671 Martin Street, Penticton, B.C.

Number of units: 31

Sale price: $7 million

Price per door: $225,806

Brokerage: Marcus & Millichap, Vancouver

Brokers: James Blair, Patrick McEvoy

© 2023 Western Investor