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Abbotsford

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Sutton Group-We
2790 Allwood St
Abbotsford, BC V2T 3R7


Promises, promises: CEO warns election rhetoric could boost home prices


Tunnel vision on housing could raise home prices

Kimberly Greene
Mortgage Broker News

During this federal election cycle, Royal LePage President and CEO Phil Soper said it’s encouraging that the candidates have focused so much thought and time to housing issues.

As candidates compete for undecided votes, however, Soper warns that taking a singularly focused approach without addressing all aspects of the housing picture could actually raise home prices further and hurt homebuyers, not help them.

“Well-intentioned election promises aimed at making housing more accessible and affordable to first-time buyers will fall flat if they trigger a surge in demand without a corresponding increase in the supply of homes. For example, lowering monthly mortgage payments by stretching repayment over a longer time period looks great on the surface, yet a surge in new buyers could cause prices to escalate, erasing the enhanced purchasing power,” Soper said.

The median price of a home in Canada increased 1.4% year-over-year to $630,335 in the third quarter of 2019, according to the Royal LePage National House Price Composite, compiled from proprietary property data in 63 of the nation’s largest real estate markets. When broken out by housing type, the median price of a two-storey home rose 1.3% year-over-year to $738,346, while the median price of a bungalow remained flat at $521,250. Nationally, condominiums remained the fastest appreciating housing type, with the median price rising 3.4% year-over-year to $457,911. Data analyzed contains both resale and new build transactions, provided by Royal LePage’s sister company, RPS Real Property Solutions.

Royal LePage forecasts that the aggregate price of a home in Canada will rise 1.5% year-over-year to $632,226 in the fourth quarter of 2019, which is a 0.3% increase compared to the third quarter of 2019. It should be noted that that forecast depends on there not being any new housing policy changes, which may or may not be the case after October 21st.

“Low interest rates and an outstanding employment picture continue to buoy consumer confidence and support our recovering real estate market,” said Soper. “The collateral damage from the trade war between the U.S. and China has been manageable to date. Barring a full-blown American recession, our outlook for Canada’s housing sector is for continued market expansion.”

In the GTA, the aggregate home price increased 3.7% to 858,443. There was “broad strength” across most areas in the region with the highest gains being in Pickering and Toronto, increasing 6.5% and 6.2%, respectively.

Healthy price growth in the detached segment combined with affordable new condominium developments and strengthening efforts to improve transit connectivity in some suburban areas contributed to an increase in the number of transactions, especially in the suburban 905 area code.

“The shrinking price gap between condominiums and detached properties in many areas of the GTA has encouraged some homebuyers to save for a bit longer and enter the market owning a bungalow or a two-storey home,” said Chris Slightham, president, Royal LePage Signature Realty. “We’ve also seen an increase in consumer confidence across the GTA partly because of the recent decline in the benchmark five-year interest rate, which has made single-family homes more attractive.”

Home price declines in Greater Vancouver aren’t necessarily increasing affordability, as the aggregate home price in the third quarter of 2019 was $1,194,900. Still, Randy Ryalls, general manager at Royal LePage Sterling Realty, said that they’ve seen an increasing number of homebuyers become willing to enter the market, and they expect more through the end of the year.

“Greater numbers of buyers are taking advantage of favourable market conditions and excellent mortgage rates, leading to what appears to be a solid footing in our price correction. Low unemployment, wage growth and pent-up demand are contributing to a change in market conditions that we should see emerge in the coming months,” said Ryalls.

Home prices decline in Calgary, Edmonton, Regina, and Saskatoon, however, provide great opportunities for new buyers.

“The Saskatoon real estate market continues to show signs of a recovery,” said Norm Fisher, broker and owner, Royal LePage Vidorra. “We have moved toward a balanced market as buyers are responding to the affordability of entry-level units in the area. It’s an attractive time to enter the market.”

What’s becoming clear is that a one-size-fits-all approach to housing in Canada isn’t going to be the most effective way to keep home prices from skyrocketing in some places while providing a much-needed boost for market stabilization in others. Regional differences need regional approaches, and that goes far beyond surface-level solutions and sound bytes.

“With the fastest growing population among advanced economies worldwide, providing adequate shelter for Canada’s rapid pace of household formation presents an economic opportunity and a social challenge,” Soper said. “Careful stewardship of the real estate industry and its related financial sector is critical for the health of the country’s economy and the personal wealth of Canadian families.”

Copyright © 2019 Key Media



This is the largest driver of Canada’s population growth


Population growth continues to drive Canadian condo market activity

Ephraim Vecina
Mortgage Broker News

Much of the growth in Canada’s population and consumer base can be attributed to immigration, according to Statistics Canada.

Latest figures from the agency showed that 82.2% of the population growth seen in 2018/2019 stemmed from immigrants and non-permanent residents.

During this time frame, Canada admitted 313,580 immigrants, which was one of the highest volumes ever recorded. The number of non-permanent residents also increased by 171,536 during this period, accounting for the largest increase in Canadian history.

“While also fuelled by rapid growth in asylum claimants, this gain was mainly led by an increase in the number of work and study permit holders. Temporary immigration assists Canada in meeting its labour market needs,” StatsCan noted in its data release.

This fed into the country’s robust population growth of 1.4%, which was the highest among G7 nations. This pace was more than twice as fast as that seen in both the United States and the United Kingdom (0.6% each), and stood considerably above the rate seen in Germany (0.3%) and France (0.2%).

Population growth has been a major contributor in the nation’s steadily swelling mortgage credit load. Bank of Canada figures showed that the outstanding balance reached a new high of more than $1.59 trillion as of August, increasing by 4% annually and by 0.6% from July 2019.

This was the fifth straight month of growth in this metric. The August upswing was also 8.1% higher than the year-over-year gain seen during the same month last year.

Copyright © 2019 Key Media



New home prices rise for the first time in more than a year


There is slight increase in the price of new housing nationally

Steve Randall
Mortgage Broker News

There was a slight increase in the price of new housing nationally in August.

Prices were up 0.1% from July, the first increase since July 2018, led by notable increases in the Sherbrooke (2.1%), Montreal (1.1%), and Trois-Rivieres (0.5%) CMAs due to higher construction costs.

Favourable market conditions reported by builders meant higher prices in the Kitchener-Cambridge-Waterloo area (1.5%), perhaps due to the strength of the tech sector and the affordability of the market relative to Toronto.

Statistics Canada data also shows that Oshawa and St. Catharines–Niagara were both down 0.4% month-over-month amid unfavourable market conditions.

Year-over-year decline
The newly-released data shows that year-over-year prices declined for a third consecutive month with August posting a 0.3% decline.

The national figure was impacted by sizeable declines in new home prices in Calgary (2.2%) and Regina (2.1%) which led the declines for the third straight month as elevated inventory weighed on prices.

Ottawa (+5.5%) and Montréal (+4.3%) saw the largest year-over-year increases in August, mostly because of the continuing trends of favourable market conditions and higher construction costs.

Out of the 27 CMAs surveyed, Ottawa has been recording the largest year-over-year increases in new house prices since May 2018.

Copyright © 2019 Key Media



Colliers makes landmark sale of Vancouver multifamily asset


Surrey Gardens Apartment complex sold

Steve Randall
Mortgage Broker News

Colliers International is celebrating the sale of one of the largest multifamily investment assets in Vancouver.

With 3 wood-framed apartment buildings, 223 residential units, 11,000 square feet of retail, and all set in around 5.9 acres, the Surrey Gardens Apartment Portfolio sale was the first since it was constructed in 1973.

The firm held a competitive bidding process which received 10 bona fide offers from local private Investors, foreign investors and REITS within one month.

The unconditional winning bid for 100% of the freehold of the asset was negotiated by the Colliers team, led by Casey Weeks and Morgan Iannone of the Greater Vancouver Area office.

The asset is located in the St Helen’s Park neighbourhood and is within a 15 minute walk or short drive to shopping and other amenities, along with the Simon Fraser University campus.

Copyright © 2019 Key Media



September home sales surge signals the real estate market is returning to equilibrium


In September were up in both Toronto and Vancouver, housing prices presented a different picture

Murtaza Haider and Stephen Moranis
The Vancouver Sun

Housing markets in Toronto and Vancouver appear to be on the mend, as both gained strength over the summer and have posted a record increase in sales in the fall.

September housing sales in greater Vancouver increased by 46.3 per cent from the same month last year. A similar story emerged in greater Toronto where the September 2019 sales were 22 per cent higher than the sales recorded a year earlier.

While sales in September were up in both Toronto and Vancouver, housing prices presented a different picture. The MLS composite home price index, which captures the price of a typical dwelling over time, was up by 5.2 per cent on an annual basis in Toronto. In comparison, the index was down by 7.3 per cent in Vancouver.

While the industry has greeted the rebound with relief, the question of why sales are bouncing back now is unclear.

Some experts believe that low mortgage rates have been a factor. Also, buyers previously deterred by the stress tests might “have adjusted to the guideline in terms of the type and location of purchase, purchase price and down payment amount,” according to Jason Mercer, chief market analyst for the Toronto Real Estate Board.

Others believe that shared equity mortgages (SEM) might have contributed to the increase in sales. SEMs, which became effective in September, provide up to 10 per cent of the purchase price to a first-time homebuyer in exchange for an equity stake in the property. Proponents believe that SEMs help reduce monthly mortgage payments, which may induce housing demand by first-time homebuyers.

While the theory seems plausible, we believe SEMs are an unlikely catalyst. SEMs come with certain conditions. For one, the qualifying properties must be priced under $500,000 — a category that actually saw a five per cent decline in sales in Toronto on a year-over-year basis.

The more substantial increase in sales was observed for rather expensive properties in Toronto. September 2019 sales of homes priced between $1.25 and $1.75 million increased by more than 50 per cent on an annual basis, while those of homes priced between $900,000 and $1.25 million jumped by more than 40 per cent.

Tsur Somerville, a professor of real estate finance at the University of British Columbia, noted an uptick in sales over the summer. Houses in Vancouver’s high-demand neighbourhoods were “moving very quickly,” he noted.

Somerville pointed out that the last month’s jump in sales in Vancouver comes following a down period in September 2018, when sales relative to the year before had collapsed by 43.5 per cent. The Vancouver market, in other words, is trying to regain what it had lost over the past couple of years.

What is interesting about the sudden resurgence in sales in both Toronto and Vancouver is that it occurred during a period of strong “underlying economic fundamentals that have not changed much,” Somerville said.

Some experts believe that the converging prices of semi-detached units, condominium apartments, and townhouses in cities such as Toronto are indicative of markets approaching an equilibrium. Benjamin Tal, the deputy chief economist with CIBC World Markets, believes that the correction in low-rise housing is finally over. The pent-up demand in Toronto has brought the buyers from the sidelines resulting in an acceleration in sales and prices.

Housing markets have arrived back at a point “where we should have been,” said Tal.

The evidence that markets are returning to their long-term equilibrium is indeed getting stronger. September 2019 sales in Toronto, at 7,825 units, are similar to the sales recorded in September 2014 and 2015. At the same time, housing prices in Toronto, despite the earlier decline in sales volume, have been resilient over the past five years.

Like other economists, Tal also believes that declining interest rates have helped the recovery in housing markets. However, he cautions the markets to be prepared for an interest rate hike in 2020 or soon afterwards.

© 2019 Financial Post



Teranet partnership takes real estate insights to new heights


Nearmap Ltd. Joins Teranet in real estate information provider

Steve Randall
Canadian Real Estate Wealth

A Canadian provider of information systems for the real estate, legal, and financial services industries, has announced a high-flying new partnership.

Teranet will work with aerial imagery and location data experts at Nearmap Ltd, to deliver a suite of complimentary new products to the market that leverage Teranet core competency in reliable land and property data and Nearmap’s suite of new revolutionary imagery products.

“We are very excited about this partnership. Combining Nearmap’s advanced imagery capabilities with Teranet’s expertise in real estate and property insights creates so many possibilities for our organizations”, said John Robinson, VP, Commercial Solutions at Teranet. “This synergistic partnership will enable our organizations to deliver complimentary solutions to a broad range of customers and significantly extends our capabilities across Canada.”

Nearmap is one of the 10 largest aerial survey companies in the world. The Australian firm regularly captures wide-scale urban areas in Australia, New Zealand, and the US multiple times each year.

“This partnership between Nearmap and Teranet brings together crucial information from the ground and in the air for anyone making land and property decisions,” said Patrick Quigley, Executive Vice President and GM of International Partnerships and Expansion. “We are excited to partner with Teranet to bring an industry leading set of rich Canadian based content and solutions to customers.”

Copyright © 2019 Key Media Pty Ltd