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RE/MAX Crest Realty
1428 W 7th Ave.
Vancouver, BC V6H 1C1


OREA sets new ground rules for realtors as Ontario’s economy restarts


Realtors continue to help clients feel safe

Ephraim Vecina
Mortgage Broker News

The Ontario Real Estate Association (OREA) has published its latest guidelines on home purchase transactions in the era of COVID-19.

“The health and safety of our realtors and their clients is OREA’s top priority during this pandemic,” said Sean Morrison, president of OREA. “As Ontario’s economy reopens, many Ontarians are looking to get back into the real estate market. Realtors are here to help make home buyers and sellers feel comfortable and safe while they work to find their dream home. OREA’s guidelines have been informed by up-to-date information from public health, best practices from the industry and experiences in jurisdictions across North America.”

OREA was among the earliest organizations to have petitioned a shift to mostly online transactions once the coronavirus pandemic took hold in late March.

“Now that the Ontario government has announced stage one of its plan to re-open the economy and with many consumers looking to get back into the market, it is important that realtors continue to help their clients feel safe and secure and keep the virus at bay,” OREA said in a statement this week.

The association is mandating its agents to “continue [using] virtual tools, conduct virtual open houses and virtual showings to the greatest extent possible,” despite the restarting of the economy. This includes maximizing the use of phone, email, and video communications with clients, as well as processing all documents via electronic channels.

Agents should also “thoroughly disinfect surfaces, leave doors open and keep lights on at all times during in-person showings,” OREA said. “When interacting with clients, maintain physical distancing and use personal protective equipment when distancing is not possible.”

Copyright © 2020 Key Media



Re/Max challenges CMHC home price projections


Canadian real estate prices will remain stable

Ephraim Vecina
Canadian Real Estate Wealth

Housing industry players are opposing Canada Mortgage and Housing Corporation’s dire forecast of an 18% decline in home prices over the next 12 months, claiming that demand remains elevated and inventories continue to hover near record lows.

“Assuming that demand continues its current course, Canadian real estate prices will likely remain relatively stable or experience a single-digit price correction at worst,” RE/MAX said, adding that its agents are still reporting multiple offers on a regular basis.

“CMHC doesn’t seem to understand the sheer number of sellers that would have to accept this kind of price reduction, in order for average housing prices to plummet to this degree in such a short time span,” said Christopher Alexander, executive vice president and regional director with RE/MAX of Ontario Atlantic Canada. “Sellers simply won’t accept that kind of discount on their listings. A statement of this nature is panic-inducing and irresponsible.”

Government agencies should instead focus on how the housing markets – and the Canadian financial system as a whole – could weather the unprecedented impact of the coronavirus, according to the C.D. Howe Institute.

“Ottawa and the provinces need to recommit to fiscal and monetary anchors in light of the unprecedented stimulus response provided by all levels of government and the Bank of Canada throughout the COVID-19 crisis,” C.D. Howe said. “Canada is emerging from the first wave of the pandemic with very high public and private debt loads and is increasingly dependent on domestic and foreign investors to finance them. With the loss of Canada’s fiscal anchor, maintaining investor confidence so that public and private debt can be carried at a reasonable cost is essential.”

Copyright © 2020 Key Media Pty Ltd



Nanos – Consumer confidence in housing market still low


Nanos Canadian Confidence Index

Ephraim Vecina
Canadian Real Estate Wealth

While Canadian consumer confidence is steadily recovering, the same cannot be said about the public’s views towards the housing market, according to the latest Bloomberg Nanos Canadian Confidence Index.

Polling found that 48.54% of respondents are anticipating a decline in home prices within the next few months – a level approximately three times above the average for this metric, Nanos Research said.

“Even as sentiment has improved around the economic outlook and personal finances, expectations around real estate are weakening,” Nanos said.

The overall confidence index went up for the fourth consecutive week, reaching 39.3.

“While the index remains near its worst-ever readings recorded last month, the rise in confidence in recent weeks suggests negative sentiment may be finding a floor amid talk of reopening the economy,” Nanos said. “Regionally, the gains in sentiment have been mostly in Western Canada, aided by a recent rebound in oil prices and relatively fewer coronavirus cases.”

Overall confidence remained at near-record lows in Ontario and Quebec, however.

Sentiments toward personal finances over the past year have soured to 36.7%, from 42.3% last month.

There was less pessimism towards the economy, although the overall level was still quite high. Around 73% of respondents said that the economy will worsen within half a year, down from 80% last month.

Copyright © 2020 Key Media Pty Ltd



Heritage home spurs bidding war amid pandemic real estate slump


Bidding war erupts for heritage home during the pandemic

John Mackie
The Province

Real estate listings, and sales, have plunged during the COVID-19 crisis. But some properties are still selling.

Realtor David Richardson recently listed a handsome heritage home at 2120 East Pender for $1.588 million. Open houses have been nixed during the crisis, so his office set up private viewings by appointment on April 25 and 26.

So many people wanted to see it they had to extend the viewings for two days. They received 14 offers, and the buzz in the real estate industry is that the house sold for $1.928 million, $340,000 above the asking price.

Richardson wouldn’t confirm the price because the deal hasn’t closed yet. But he said there was a lot of action.

“We sent out 8,000 flyers (for the listing, noting it was) by appointment only,” said Richardson. “We lined them up every 20 minutes, and it took four days to show 75 people.”

The house was built in 1906, when its neighbourhood (Grandview) was vying to be one of Vancouver’s elite areas.

It’s big (four bedrooms, 2,500 square feet) and is brimming with character, with a turret on the outside, big open spaces on the main floor and lots of old growth wood and stained glass. It’s also on a large lot, 50 by 66 feet.

In short it’s the kind of home you might find in parts of Kitsilano or the West End. But you’d have to pay much more for a house like this on the west side, so Richardson said many of the people looking were west siders looking east.

“There’s a 20 per cent price difference (between the west and east sides),” said Richardson, who usually sells west side properties. “On a $2 million house, that’s $400,000.”

Richardson thinks one of the reasons the house attracted so much attention was a lack of listings during the pandemic.

“Normally a guy like me carries 12 to 15 listings at this time of year. I’m carrying one or two, and they’re being snapped up right away.

Realtor Les Twarog said things have been slow.

“The real estate board normally has 120 sales a day, and we’re doing about 40 or 50 sales a day,” he said.

But things are starting to pick up: Twarog has listed eight properties in the last couple of weeks.

“I listed a property on Kingsway and Boundary, $350,000, and I got eight calls in two days on it,” said Twarog. “I have another property I listed in Victoria yesterday at five o’clock, and I got 15 calls. The price is $500,000.”

Twarog said the two key factors in selling seem to be “a lack of inventory and the price point.”

“Things are happening, but most sales are under $1.2 million,” he said. “Five hundred, six hundred, seven hundred thousand, those are the hot price points.”

On Vancouver’s west side, there were 421 detached houses for sale in April, but only 37 sales, which is down from 699 listings and 64 sales in April, 2019. In east Vancouver, there were 349 detached house listings and 49 sales, down from 664 listings and 66 sales in April, 2019.

There were 647 condos and townhomes listed on the west side in April, and 78 sales, down from 977 listings and 137 sales a year ago. Fifty-seven of the 78 sales were for $1 million or less.

On the east side, there were 386 condos and townhomes listed and 67 sales, down from 583 listings and 141 sales last April. Thirty-three of the 67 sales were for condos $600,000 and under.

Selling a home is a bit different during the COVID crisis. Realtors have been using online tools like Zoom, Google Meet and Instagram to try and show listings.

To see 2120 East Pender, you had to book an appointment in advance, and not be late.

“Each appointment was individually booked at a time,” said Sarah Starling, who works with Richardson.

“So we had 11, 11:20, 11:40, 20 minute intervals. Everyone was required to wear a mask and gloves, and we provided booties. So everybody had to go with mask, gloves, booties, one group at a time.”

© 2020 Postmedia Network Inc



Expect rapid post-pandemic recovery – BoC’s Poloz


Quick recover expected post pademic

Ephraim Vecina
Mortgage Broker News

Despite multiple headwinds and the continuous ravages of COVID-19, Canadian market activity and purchasing power will be able to recover quickly after the outbreak eases, according to outgoing Bank of Canada Governor Stephen Poloz.

“We have to be able to manage the risks around those things, so I’m not going to dismiss [the worst scenarios],” Poloz told BNN Bloomberg. “But, me personally, I do think on balance what I’m hearing, the flow that I’m hearing, is a little too dire, a little bit overblown.”

In the greater scheme of things, the coronavirus will not be a fatal roadblock, Poloz said. While the national economy is still on track to decline at least 15% this year, “you should see a very rapid return to production” once the economy restarts in late 2020, he said. “I’m relatively optimistic, what I find, compared with what the talk is.”

These predictions dovetailed with other observers’ forecasts of speedy post-pandemic recovery across the board, pointing at the Canadian financial system’s robust fundamentals.

However, the pace of this recovery will depend on homeowners not selling their assets, according to TD Economics.

“Absolutely key to our forecasts is the assumption that listings mirror sales by dropping substantially in the near term and recovering gradually thereafter,” said TD economist Rishi Sondhi. “This puts a floor on prices and sustains relatively tight supply-demand balances across most markets, allowing for the resumption of positive price growth as provincial economies are re-opened.”

Copyright © 2020 Key Media



Stress test 2.0? What a 10% minimum down payment requirement would mean for Canadian buyers


A 10 percent minimum down payment would have a chilling effect on business

Ephraim Vecina
Mortgage Broker News

Canadian Mortgage and Housing Corporation CEO Evan Siddall’s recent address to the Standing Committee on Finance contained a plethora of negative projections, from housing prices falling by 18 percent to one-fifth of all Canadian mortgages being in arrears by September. But it was his comments around the advantages of making 10 percent down payments and CMHC’s attempts to limit demand that have the industry wondering if an increase in the minimum down payment requirement may be in the cards.

As Siddall made his case for the approaching “deferral cliff”, a scenario where unemployed homeowners who have deferred their mortgage payments are asked to start making them again despite not returning to work, he shared with parliamentarians two key pieces of data that associate five percent down payments with increased risk.

The first, a chart that tracks the percentage of loans in deferral by their loan-to-value ratios, showed that 69 percent of the mortgages currently in deferral fall into the 90-95 percent LTV category. The implication seems to be that if there were fewer borrowers putting down five percent, the deferral cliff Siddall described might be less towering.

Siddall singled out first-timers again when he discussed the potential losses they could face if housing prices fall by 10 percent.

“Unless we act, a first-time homebuyer purchasing a $300,000 home with a 5 per cent down payment stands to lose over $45,000 on their $15,000 investment if prices fall by 10 per cent,” Siddall’s statement read. “In comparison, a 10 per cent down payment offers more of a cushion against possible losses.”

Because CMHC will be on the hook for any insurance claims triggered by failing mortgages, Siddall also said the Corporation is evaluating its underwriting policies.

“So if housing affordability is our aim, as surely it must be, then there must be a limit to the demand we help to create, especially when supply isn’t keeping up,” he said.

That’s the same logic that gave Canada its mortgage stress test. Many brokers are worried that a 10 percent minimum down payment would have a similarly chilling effect on business.

“I think it would be a comparison you could draw a lot of parallels to,” says Anthony Venuto of Centum Intouch Mortgage Solutions.

As with the stress test, Venuto feels that any desire for a doubling of the down payment requirement will be driven by the risk associated with lending in Canada’s most expensive markets – Toronto, Vancouver, Montreal, etc. – even though most, if not all, properties in those cities sell for over $500,000, making them ineligible for five percent down payments. It will be the smaller, softer, far more numerous markets where consumers will see their spending power evaporate.

“What about the rest of Canada?” he wonders.

Impact on brokers
Chris Kolinski operates for iSask Mortgage Brokers in Saskatoon. The Bridge City’s real estate market has been soft as warm cheese for the past five years. With homes there appreciating so slowly, buyers often opt for putting five percent down.

“I’d say about 80 percent of the purchases I do are five percent down purchases,” Kolinski says. “It actually comprises a big chunk of the business I do.”

Kolinski is in regular contact with brokers in Alberta and Manitoba. He says minimum down payment deals are a common occurrence.

“If this was to happen, I anticipate a big hit to homebuyers in the prairie provinces for sure,” he says.

John Vo of Spicer Vo Mortgage in Halifax, another market where buyers are regularly able to purchase homes will five percent down, understands the desire of insurers and lenders to protect their assets by requiring higher down payments. But it’s an odd move for institutions that require a high volume of home purchases to keep the wheels spinning and the margins as high as possible.

“They’ll have more quality mortgage holders,” Vo says, but far fewer overall.

With down payments being one of the biggest challenges facing homebuyers, Vo says brokers will be expected to work much harder for their clients if the down payment requirement doubles. It will require a delicate balance: Brokers will have to set hard savings guidelines for their clients if they hope to qualify, but buyers frustrated by their situations may decide to switch brokers if they’re constantly being told something they don’t want to hear.

“We’re going to have to become even more firm with our customers in saying, ‘This is your plan. You really need to stick to it,’” he says.

For Kolinski, an increase in the required down payment is a challenge he’s ready for.

“I’ll adjust the same way I did when they introduced the stress test back in 2016,” he says. “It was a huge panic for me when it happened. But ultimately, it comes down to us as brokers being able to adapt to the market.”

Few in the industry seem to think the change is imminent. Either way, the discussion around down payment levels has shone a harsh light on the anxiety-ridden situation facing first-time buyers.

“We’re hearing more and more that home ownership isn’t a right, it’s a privilege,” says Verico COO Mark Squire. “You feel for those first-time buyers. You’re going to see more pressure on the bank of mom and dad to help out.”

Copyright © 2020 Key Media