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Investment in multifamily construction reaches new heights

The residential construction sector led the gains for overall Canadian construction investment in April

Steve Randall

The residential construction sector led the gains for overall Canadian construction investment in April, the latest month of figures released by Statistics Canada.

The 3.6% increase for the residential sector took investment to $10.6 billion for the month, while the non-residential sector gained 0.3% to $4.7 billion. The total investment in Canadian construction was up 2.6% to $14.8 billion.

Within the gains for residential construction investment, the multi-unit dwellings sector hit new highs in April with a 7.1% increase to $5.6 billion. The single-family homes sector gained 0.3% to $5.0 billion.

Provincially, gains in multi-unit investment were led by British Columbia (+$205 million), Manitoba (+$94 million) and Quebec (+$75 million).

Meanwhile, non-residential investment was up slightly in Quebec (+$19 million) and British Columbia (+$16 million). These gains were partially offset by declines in Alberta (-$11 million) and Ontario (-$11 million).

Copyright © 2019 Key Media Pty Ltd

Political unrest in Hong Kong is bad news for Vancouver millennials

Upheaval in Hong Kong could have people moving to Vancouver

Neil Sharma
Mortgage Broker News

With political upheaval in Hong Kong, which has seen millions take to the streets to protest an extradition law with Mainland China, speculation is rampant that a rush of new residents will make their way to Vancouver.

If that happens, there could be implications for domestic homebuyers, many, if not most, of whom are already struggling to get a foothold in the local real estate market.

“The younger people who are trying to purchase homes right now are already sidelined because of the cost of real estate in Vancouver and what I think is a very punitive stress test,” said Vancouver-based mortgage broker Robert Mogensen. “If the political situation in Hong Kong causes people to flee and many choose Vancouver, it will only make the situation worse for younger people already living in the city.”

Granted, Hong Kong money would be nothing new for Vancouver. Anticipating the territory’s turnover to China in 1997, money began flowing into Vancouver from Hong Kong in the late ‘80s, however, much has changed since then.

“A lot of Hong Kong residents have, over the years, been buying property in Vancouver, so I’m not sure there would be a great rush, although, to some degree, I’m sure there will be people coming here if unrest in Hong Kong continues, and that will worsen the existing problem,” continued Mogensen.

Mike Michelin, a mobile mortgage advisor with CIBC who’s based in Vancouver, says the industry has been abuzz with speculation this week that Hong Kong residents, fearful of relentless encroachment from Mainland China, will flock to Canada rather than only to the west coast metropolis.

“There’s been buzz around town from industry brokers that there could be an influx of people from Hong Kong, but we’ll have to see whether it will have an impact on the market here,” said Michelin. “We’ve heard between 150,000 to 170,000 would be coming back to Canada from Hong Kong, but, for the most part, I think they’ll go to the GTA because Toronto is a centre and there are better chances of employment there. It will be interesting to see if we get a spike.”

While new residents would certainly inject life into Vancouver’s reeling real estate market, Michelin admits that news of yet more foreign money must make younger people chary.

“If you’re a Canadian resident aged 25 to 30 and just starting out your career, it might not be very positive because it will impact prices, making them go up,” he said. “If you want to sell your home, it could be a good thing, but for first-time buyers it will be a challenge if prices rebound and go up.”

While Mogensen believes Vancouver’s become too fragile to sustain more capital inflow from abroad, he noted that Mainland Chinese money is the culprit. Yet, irrespective of the money’s provenance, younger Vancouverites’ frustrations are palpable in the city.

“They’re very fearful that the situation is getting worse and they’re very frustrated, not to mention disillusioned, with the government because it allowed this to happen as it stood idly by, happy to collect taxes at the expense of Canadians who want to buy property in Vancouver,” he said. “It’s sad because a lot of younger people are leaving the city for other parts of the province and country, or if they’re staying they feel hopeless. Their incomes in no way, shape or form allow them to buy much real estate in Vancouver or even the Greater Vancouver Area.”

Copyright © 2019 Key Media

AutoProp is now available to 18,000 realtors – a MyLTSA product

Real estate boards sign up for BC property info solution

Steve Randall

Property research and analysis technology owned by the Land Title and Survey Authority of British Columbia has been adopted by another three real estate boards.

The Fraser Valley Real Estate Board, the BC Northern Real Estate Board and the Chilliwack and District Real Estate Board have all introduced AUTOPROP as a new service available to their members, following its adoption by the Real Estate Board of Greater Vancouver.

t means that more than 18,000 real estate agents across BC can currently access AUTOPROP to quickly gather relevant and detailed property information and provide it to their clients in a visually appealing format.

“AUTOPROP eliminates the need to search multiple sources for property information, which will be a big time-saver for our members and a benefit to their clients. We’re excited to be able to extend this technology to our members,” said Kyle Nason, President, Chilliwack and District Real Estate Board.

Further expansion The LTSA is working with the remaining real estate boards across the province with the aim of making the technology available to more real estate professionals.

“AUTOPROP enables Realtors to provide proper due diligence to their clients. Consumers will benefit from increased transparency and access to information, helping them make informed real estate decisions,” said Connie Fair, President and CEO, LTSA.

Copyright © 2019 Key Media Pty Ltd     

Owners aren”t actually present in nearly half of Vancouver’s condos

Almost half of Vancouver condo units are not occupied by owners

Ephraim Vecina
Canadian Real Estate Wealth

Vancouver’s condominium market has been a hotbed of activity and price growth over the past few years, but Simon Fraser University academic Andy Yan has just confirmed many hopeful home buyers’ worst fears: Almost half of the city’s condo units are not occupied by their owners.

These condos tend to be rented out, used as secondary properties by their owners, or left vacant, unable to be counted as additional supply in the incredibly tight market.

“The big take on this [data] is the role of units that are not owner-occupied — a.k.a. investments,” Yan said, as quoted by the Vancouver Courier.

In his analysis of fresh data from the Canadian Housing Statistics Program, Yan stated that 46% of the city’s condominiums are not-owner occupied. The phenomenon was especially apparent in Electoral Area A, where 49% of condo units are not-owner occupied.

These ratios were markedly higher than the 35% market share seen in 2009.

“So things became progressively worse, and we knew [about it] 10 years ago,” Yan noted.

“It illustrates the types of demands that are in Vancouver housing and really goes into the question of what’s the priority in demand that our housing system needs to meet — investments versus, say, someone who’s trying to set their roots in the city, not to mention the importance of actually having an affordable purpose-built rental stock as opposed to one that’s dependant on this kind of fragmented, precarious condominium-as-rental system.”

Yan concluded that any federal or provincial-level strategy that will aim to ensure market stability should seriously regulate short-term rentals.

Copyright © 2019 Key Media Pty Ltd

Magnum Projects’ new development Soleil in White rock offers 8% return on down payments

Development offers 8% returns on down payments

Neil Sharma
Canadian Real Estate Wealth

As Vancouver’s real estate market continues sputtering, developers are coming out with all kinds of incentives, one of which is an 8% annual return on a preconstruction down payment.

A condo called Soleil White Rock Living, located in the retirement community of White Rock about three-quarters of an hour from downtown Vancouver, is enticing buyers with the prospect of making an extra $23,275 to $77,275 in interest on their 20% down payments.

“White Rock is a funny market,” said Craig Anderson, director of marketing and sales at Magnum Projects. “It’s a downsizer market where people are sitting on houses they purchased 25 years ago and they’re equity rich. But the hurdle is that homes in the Lower Mainland have dropped 10-15% in the last six months, so your home that was once $1.5 million is now worth $1.35m”

That has made potential buyers reticent about taking out home equity lines of credit for deposits on new homes because they’re looking at a 4.45% rate.

“Their mortgages after 25 years are small, so if we pay an 8% return, we cover the 4.45% and then they continue earning interest on their money,” continued Anderson. “No incentives in Vancouver seem that customer-focused; they’re often full of realtor bonuses or they’re just discounts. What we’re saying is that there’s more interest to be earned the sooner you buy.”

Interest, of course, keeps accruing until the building completes.

“If the development is two months late, that’s up to $850 more in interest,” added Anderson. “It’s a fair incentive if the developer and buyer both have skin in the game.”

Mike Michelin, a mobile mortgage advisor with CIBC, says that in nearly three decades in the industry this incentive is a first for him. Moreover, it presents seniors the ideal retirement plan.

“I’ve never seen this kind of incentive before, and I’ve been in the industry for 26 years,” he said. “It’s good for seniors because if you’re in that demographic of getting ready to retire in the next four to five years, or already retired, a lot of seniors in their mid- to late-50s, early-60s, will generally have a home paid for, clear title, or have a small mortgage on it and they’re looking to buy a property.

“With an 8% return, 4.45% is your cost of borrowing, so you’re beating the spread on your line of credit. Usually, people don’t get anything on a pre-completion unit.”

Copyright © 2019 Key Media Pty Ltd

B.C. money-laundering estimates may be wildly off the mark, admits report author

Chair of Expert Panel on Money Laundering in Real Estate tells SFU audience that the panel was unable to “estimate the inestimable”

Joannah Connolly
Western Investor

Media headlines proclaimed recent findings of an estimated $7.4 billion in dirty money laundered in B.C. in 2018, with approximately $5.3 billion of that going through real estate, as reported by the province-commissioned Expert Panel on Money Laundering in Real Estate. But in reality, these figures are looser even than an estimate – they could be anywhere from approximately correct to totally off the mark, report author Professor Maureen Maloney confirmed June 20.

In a refreshing display of transparency, Maloney told an audience at SFU’s Public Square discussion forum on money laundering that her panel’s estimated figures on the amount of money being laundered were only an approximation, and that definitive data was impossible to come by.

Maloney’s expert panel came up with a “conservative” estimate that $47 billion was laundered through various methods in Canada last year, based on an international standard model called the Gravity Model (click here for a fuller explanation of Maloney’s methodology in coming up with these numbers). However, because of the data gaps in using this model, that national dirty-money figure could be above $100 billion, according to Maloney’s slide presentation.

Using the “low-end, conservative” $47 billion national figure as the basis, Maloney’s team calculated that B.C.’s share of laundered money, using any laundering method, was approximately $7.4 billion. Of this, the team reported that the amount being cleaned through B.C. real estate was anywhere from $800 million to $5.3 billion. This amount, Maloney told the SFU audience, would lead to about a five per cent increase in home prices across B.C. – which could be very different in urban areas, compared with rural regions.

Maloney told the audience, “For the real estate figures, that’s even less definitive data that we have, because we had to use different methodology.”

When asked to clarify how the team came up with the B.C. figure of $7.4 billion, and whether it could be wildly off base, Maloney replied, “We used the same Gravity Model for our provincial figures as we did for the national figure, but the model is [designed as] a country model not a provincial one. This meant that the data we got for each province, including B.C., was all the same. The two biggest issues were, what was the rate of crime in that province, as well as what was the GDP. So [the data] was much less sophisticated than [the methodology used] for the entire country. So that’s absolutely correct.”

The SFU professor told the audience, “I do believe that we have probably the best estimates available, but they are only estimates. We couldn’t send out a survey to organized criminals asking them how much money they laundered and where they put the money – so we don’t have definitive data. If anybody else out there has better figures, that’s great, let’s have a conversation.”

Copyright © Western Investor