2018-05-14T11:05:17-07:000000001731201805 | Uncategorised |

BC residential sales stats

BC Home Sales Show Little Change in April

Vancouver, BC ? May 14, 2018. The British Columbia Real Estate Association (BCREA) reports that a total of 8,203 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in April, a 16.8 per cent decrease from the same month last year. The average MLS® residential price in BC was $730,507, up 0.2 per cent from the previous year. Total sales dollar volume was $5.99 billion, a 16.7 per cent decline from April 2017.

?BC home sales were essentially unchanged in April compared to March, albeit up nearly 1 per cent on a seasonally adjusted basis,” said Cameron Muir, BCREA’s Chief Economist. ?The impact of more burdensome mortgage qualifications for conventional borrowers is expected to soften over the next several months as potential buyers adjust both their finances and expectations.?

The supply of homes for sale in April increased 4 per cent from the previous month. However, total active listings on the market continue to remain low from a historical perspective. Most regions of the province have begun trending toward more balance between supply and demand, causing less upward pressure on home prices.

Year-to-date, BC residential sales dollar volume was down 6.7 per cent to $19.9 billion, compared with the same period in 2017. Residential unit sales decreased 11.8 per cent to 27,135 units, while the average MLS® residential price was up 5.7 per cent to $731,661.

2018-05-02T12:51:04-07:000000000431201805 | Uncategorised |

Vancouver market update for April

The Real Estate Board of Greater Vancouver says market conditions in the city are changing as sales in April fell to a 17-year low for the month.

The board says 2,579 detached properties, townhouses and condominiums sold last month in Metro Vancouver, down 27.4 per cent from April 2017 and 22.5 per cent below the 10-year average for the month.

About 18.6 per cent more properties were newly listed last month than in April last year, giving buyers more selection.

Still, prices moved up with the composite benchmark price for all properties at $1,092,000 — up 14.3 per cent from the same month last year and 0.7 per cent from March 2018.

Detached houses saw the smallest price gains, with the benchmark price at $1,605,800 — up 5.1 per cent from April 2017 and down 0.2 per cent from March 2018.

The benchmark price for an apartment rose 23.7 per cent from the same time last year to $701,000, while the townhouse benchmark rose 17.7 per cent to $854,200.

2018-04-19T09:13:03-07:000000000330201804 | Uncategorised |

South Okanagan Real Estate update

April 2018

Positive market forces

Amidst all the changes for our industry & consumers at large, the Okanagan Valley continues to have strong market dynamics. Tight supply has led to rising home prices over the last year (vast majority), with incredible gains made over the previous five years.

The supply of new homes is growing. Although modestly, the availability of newly constructed homes is providing a much better mix for potential homeowners to consider in the South Okanagan. This is a significant improvement and we are very thankful for the builders out there, who continue to develop the supply of homes we need. Coupled with this, the rising value of existing inventory of older homes has encouraged owners to renovate & upgrade. This is great for the longevity of the housing stock. Better condition & quality for the consumer is always a win.

Even with recent changes, interest rates are still at benign levels of around 3.0% see chart and most can qualify for their desired purchase amount. Some dreams were indeed curtailed by mortgage rule changes of January 1. This said, banks continue to have an appetite for residential mortgages bolstered by the more modest qualification environment.

The South Okanagan is a provincial and regional bright spot. Given the latest policy changes (speculation tax) our region will benefit from its exclusion from the tax. Kelowna, our superstar neighbour of relocation & retirement has been caught in the NDP’s tax zone. Those looking to relocate to the Okanagan will surely see the benefits of buying in the South (Details of the tax here).

We also continue to see buyers cashing in on their Vancouver property and relocating to the Okanagan Valley. I would expect this trend to continue for some time as the differential in prices remain significant.

Some Risks

Liberal & NDP governments seem to be tripping over themselves to whom can curb Canada’s growth the fastest. Ill conceived new taxes (most recently the speculation tax; changes to small business taxes & the foreign buyers tax) are having a policy driven effect on the BC economy & real estate market. Fundamentals suggest that the will of the consumer is still strong, but we do expect these policy initiatives to moderate expectations at some point. Some in government would say “it’s working” and others would say, “be careful what you wish for”…

All of these factors aside, a significant rate of monetary expansion is having a predictable effect, as the cash must find somewhere to go. See this illustrative chart… This does however pose an inflation risk. Given this, and the more competitive bond market globally, we will likely see rate increases ahead.

Trudeau’s government has adopted a hostility towards foreign investment that beggars belief. With a 26% Decline in foreign direct investment, I am concerned at what motivations the Liberals are taking off the table for would be investors. The decision to meddle in markets can have a long tail and last years if not decades… we can only hope the leading edge of investment confidence is not eroded further by our governments.

Moving Motivations

Irrespective of what the market appears to be doing at any given time, our lives are dynamic and constantly changing. You may need to sell a property that you once thought you’d never part with to finance a new venture or goal in life. For others, the motivation is a growing family. Sometimes, it’s a move to downsize & be closer to loved ones and grandkids. Whatever the occasion, let me know how I can be of service to you! I am always available to talk, even when it’s “just an idea”, it may be helpful to have that conversation!

Thanks for your continued loyalty & I look forward to hearing from you!

The Numbers

Sales figures through January and February were dislocated & would have led to more confusion than clarity, So I waited for the March statistics as they became much more reflective of what we are seeing ‘on the ground’ in aggregate. Below are the latest Yr-over-Yr, YTD figures.

Summerland YTD

Unchanged Single family home price at $601,387

Unchanged Condo/Townhome price at $298,944

Down -1.3% Total residential price at $492,125

Down -28% Sales Volume at $19,684,982

Down -20% Current Listing Inventory at 63

Penticton YTD

Up 7.1% Single family home price at 549,402

Up 11.8% Condo/Townhome price at $318,682

Up 10.2% Total residential price at $410,241

Up 5.8% Sales Volume at $100,098,816

Up 18.4% Current Listing Inventory at 289

South Okanagan Total YTD

Up 1.3% Single family home price at $490,823

Up 13.1% Condo/Townhome price at $310,156

Up 6.1% Total residential price at 396,971

Up 1.5% Sales Volume at $181,812,921

Unchanged Current Listing Inventory at 833 (Near historic lows) we need more listings!

Haleakala National Park, Maui (pictured above) A favourite experience (of mine 😉 while on winter holiday with Becky this year. I was graciously allowed to do a ‘bucket list’ ride from Paia to the top of the crater. 57km and 10,000 vertical feet of climbing! If you’re looking for a thin air challenge, this is it!

510 – 250 Marina Way
Enjoy the beautiful views of Okanagan lake from this spacious, east facing, 2 bedroom 2 bathroom condo. Lakeview Terrace offers its residents some of the most unique architecture in the Okanagan.

13014 Cartwright Avenue

Estate zoned 7 acre property, ideally situated within 15-minute walking distance to downtown Summerland. This is a once in a lifetime opportunity, don’t miss it!

6788 Indian Rock Road

Naramata. 2,900 sqft 4 bed 4 bath home on 1.30 acres nestled in a stunning rock canyon with a beautiful year round creek for your peace & rejuvenation.

2018-04-17T12:24:28-07:000000002830201804 | Uncategorised |

3 new mortgage rule changes. January 1, 2018

OSFI (The Office of the Superintendent of Financial Institutions) has implemented 3 new mortgage rule changes. January 1, 2018

Qualifying rate stress test to all uninsured mortgages

Uninsured mortgage consumers must now qualify using a new minimum qualifying rate. The rate will be the greater of the five-year benchmark rate published by the Bank of Canada OR the lender contractual mortgage rate +2.0%.

How does this affect the mortgage consumer with a down payment/equityof 20% or more?
The biggest impact will be on the amount for which the home buyer/owner will be able to qualify. Previously, the home buyer/owner qualified at the contract rate offered by the lender. While the actual mortgage payment will still be paid at the contract rate, a higher calculation will be used for qualification purposes.

For example:

Do I still have the option to refinance my home?
Yes, home owners will still have the ability to refinance up to 80% of the value of their property. You will have to pass the same stress test which is the higher of the BoC five-year benchmark rate (currently 4.89%) OR the contract rate from the lender plus 2%.

Lenders will be required to enhance their loan-to-value (LTV) measurement and limits to ensure risk responsiveness

Mortgage lenders (excluding credit unions and private lenders) must establish and adhere to appropriate LTV ratio limits that are reflective of risk and updated as housing markets and the economic environment evolve. We are awaiting more details on this policy from lenders. As we have new information, we will update this document.

What does this mean?
OSFI directs lenders (excluding credit unions and private lenders) to have internal risk management protocols in higher priced markets (sometimes called “hot real estate markets” like Toronto and Vancouver). This is a continuation of a policy already in place. Many mortgage lenders have been following the principles of the policy for the last 10 to 12 months.

Restrictions will be placed on certain lending arrangements that are designed, or appear designed to avoid LTV limits

Mortgage lenders (excluding credit unions and private lenders) are prohibited from arranging with another lender: a mortgage, or a combination of a mortgage and other lending products, in any form that circumvents the institution’s maximum LTV ratio or other limits in its residential mortgage underwriting policy, or any requirements established by law. This is often referred to as “bundling” or “bundle partnership”.

What does this mean?
For example: a consumer applies for a mortgage with an 80% LTV and the lender can only approve 65%. The lender then partners with a second lender for the additional 15%. The original lender then “bundles” the 15% LTV mortgage with the original 65% mortgage to form the complete 80% LTV loan. This is no longer permitted as per OSFI.

—

Chart - New Mortgage Rules 2018

2018-04-05T20:46:39-07:000000003930201804 | Uncategorised |

Be Careful What You Wish For

Market Intelligence BCREA Economics April 4, 2018

Careful What You Wish For – The Economic Fallout of Housing Price Shocks

The desire of some well-meaning British Columbians for government to drive down the price of homes through demand-side policy may sound practical at first blush. However, when you consider the broad and deep economic toll that a negative shock to home prices would exact on both homeowners and renters, it quickly becomes apparent that such an approach is at best, a mug’s game. BCREA Economics analysis* shows that even a relatively modest negative price shock will produce significant consequences to the BC economy.

Nearly 70 per cent of British Columbian households own their home. A relatively minor 10 per cent negative shock to home prices would extinguish $90 billion of their wealth, or $70,000 of the average homeowner’s equity. While some may see this as a paper loss, it will have a significant impact on the economy, as declining household wealth reins in consumer spending. Retail sales would suffer, with an estimated $1.8 billion in forgone revenue in the first year after the shock.

Home construction activity would fall dramatically. Home builders would cut back production 25 per cent; that’s 10,000 fewer housing starts in the first year alone. A negative price shock would markedly slow the expansion of the housing stock, creating even more critical housing supply problems down the road.

Across the economy, a negative home price shock will slow growth. Tens of thousands of jobs will be forfeited. The unemployment rate will shoot up. A 10 per cent negative price shock will slow real GDP growth to 1.5 per cent from a baseline of 2.7 per cent. That’s $3 billion in lost activity. If home prices fell 35 per cent, a level some activists are championing, the BC economy would collapse into recession. The average home owner would have lost $245,000 in equity, housing starts would fall by half, 64,000 jobs would be forfeited – sending the unemployment rate to 7.5 per cent with $4.4 billion in forgone retail sales and a colossal $8 billion loss to GDP in the first year.

This analysis does not account for the negative impact on provincial tax revenues, expanding deficits, ballooning debt and credit downgrade risks.

Think seriously about what you want when asking the government to intervene in a market system. You are playing with fire. Loss of GDP has an extremely long tail of destruction.

2018-04-04T09:51:28-07:000000002830201804 | General News |

Poll: Canadian’s home buying intentions highest in 8 years

Despite tighter mortgage lending rules, the number Canadians planning to buy a home has hit the highest level since 2010, according to a new RBC poll.

The annual Home Ownership Poll, released Tuesday, revealed 32 per cent of Canadians say they are likely buy a home within the next two years.

Millennials (those aged 18 to 34) report the highest home-buying intentions, with half of those surveyed expressing plans to buy a home in the next couple of years, as their worries around employment prospects and the state of the economy subside.

The majority (84 per cent) of young Canadians said they think buying a home is a “very good” or “good” investment. And nearly one in 10 respondents in this age group even said they would buy a home without seeing it in person.

However, only about 40 per cent of respondents said they are aware of the new stress test rules that took effect in January. The majority (55 per cent) admitted the measures are affecting their home-buying decision.

“Canadians continue to feel optimistic about getting into the housing market despite changes in government regulations,” Nicole Wells, vice president of home equity financing at RBC, said in a release. “They’re taking a more informed journey to home ownership by starting with affordability.”

At the same time, more Canadians said they are somewhat concerned about interest rate increases (61 per cent), a 10 per cent jump from last year’s survey. More than one third (35 per cent) said they are contemplating purchasing a home sooner because of the low-interest-rate environment.

When it comes to making a down payment, 35 per cent of Canadians said they’d be turning to family for help, with almost an equal number (36 per cent) planning to use their own savings.

“I think part of what you’re seeing now is this sort of tug-of-war,” Kash Pashootan, CEO and chief investment officer of First Avenue Investment Counsel, said in an interview with BNN. “On one side, you have the potential homebuyer feeling pretty good that prices have softened somewhat. We’re not seeing the same level of bidding wars we saw last year.”

“The other side of the equation is of course what we’ve seen with tighter rules around what banks will lend,” he added. “It will be interesting to see where the dust settles.”

2018-03-29T09:35:01-07:000000000131201803 | Taxation |

BC Speculation tax details

Ministry of Finance

Tax Information Sheet

ISSUED: February 2018 REVISED: March 2018 Information Sheet 2018-001

gov.bc.ca/propertytaxes

B.C. Speculation Tax

Urban centres throughout the province are in a housing crisis. Rents and home prices have surged past local incomes and, in many communities, vacancy rates sit close to 0%.

Speculation has contributed to runaway prices and made it difficult for British Columbians to find a home they can afford. This is hurting people, businesses and communities.

The speculation tax works to ensure that British Columbians can afford to live in their own province. It will push speculators out of the housing market, and help turn vacant and underutilized properties back into homes for people who live and work in our province. The tax will work to increase the supply of available housing in designated urban centres, helping to ensure our teachers, carpenters and small business owners can live where they work.

The tax is designed to capture foreign and domestic speculators, satellite families who live in B.C. but do not pay their share of income taxes, as well as homeowners who hold vacant property in designated urban centres. Over 99% of British Columbians are estimated to be exempt, because they will not have a vacant second home in the affected areas.

Implementation details:

Focus on urban centres:

The speculation tax applies to residential property in British Columbia’s largest urban centres facing the housing affordability crisis. These are regions with low vacancy rates that are facing severe affordability challenges in which home prices drastically exceed local incomes.

The tax applies in the Metro Vancouver Regional District (excluding Bowen Island and Electoral Area A, except the part of the electoral area that is the UBC and University Endowment Lands), the Capital Regional District (excluding the Gulf Islands and

PO Box 9427 Stn Prov Gov Victoria BC V8W 9V1

Juan de Fuca), Kelowna-West Kelowna, Nanaimo-Lantzville (excluding Protection Island), Abbotsford, Chilliwack, and Mission. Most islands are excluded.

Map of areas the speculation tax applies to:

Speculation tax map

Exemptions:
Primary residences of British Columbians are exempt from the tax.

Properties that are used as qualifying long-term rentals are exempt from the tax. Homes will need to be rented out for at least three months to qualify for an exemption in 2018. Starting in 2019, homes will need to be rented out for at least six months, in increments of 30 days or more, to qualify for an exemption.

Over 99% of British Columbians will be exempt, because the vast majority of homes owned by British Columbians in the province’s urban centres will either be owner- occupied or will be rented long-term.

Rate design:

In 2018, the tax rate for all properties subject to the tax is 0.5% on the property value.

In 2019 and subsequent years, the tax rates will be as follows:

2% for foreign investors and satellite families;
1% for Canadian citizens and permanent residents who do not live in BritishColumbia; and
0.5% for British Columbians who are Canadian citizens or permanent residents(and not members of a satellite family). Credit design:British Columbians who are Canadian citizens or permanent residents, and not part of a satellite family, will be eligible for a tax credit that is immediately applied against the speculation tax. This credit will offset a total of $2,000 in speculation tax payable. For homeowners with multiple properties, the tax credit will only apply to one property.
This tax credit will ensure that British Columbians do not pay tax on a second home valued up to $400,000. For more expensive vacant properties, the credit ensures that tax only applies to the value of the property above $400,000.

Speculation Tax Page 2 of 4

Who doesn’t pay the tax:

The vast majority of British Columbians:

Over 99% of British Columbians are estimated to be exempt from the speculation tax because they own a home and live in it, rent a home, have a second property that is outside of a designated urban centre, have a second property that is valued below $400,000 or have multiple urban properties that are rented out long-term.

People whose homes and cottages are outside the designated urban centres:

The speculation tax uses a targeted approach. It is purposefully designed to help bring housing stock onto the market in B.C.’s urban centres hit hardest by the housing crisis. People with homes and cottages outside the designated area do not pay the speculation tax.

Homeowners with properties in designated urban centres, but who rent them out long-term:

People who hold properties in designated urban centres will also be exempt from the tax if they rent the properties out at least six months a year.

Those eligible for special exemptions:
There will be exemptions to accommodate special circumstances, including:

The owner or tenant is undergoing medical care or residing in a hospital, long- term care or a supportive-care facility
The owner or tenant is temporarily absent for work purposes
The registered owner is deceased and the estate is in the process of beingadministeredWho pays the tax:
Foreign speculators and satellite families:

Foreign demand and capital continue to put pressure on B.C.’s housing stock. Foreign owners and satellite families — households with high worldwide income that pay little income tax in B.C. — will be captured by the tax and will not be eligible for a primary residence exemption.

Speculation Tax Page 3 of 4

Foreign owners and satellite families can avoid the tax by renting their property. They will be able to offset a portion of the speculation tax with a non-refundable tax credit if they report income in B.C.

Domestic speculators:

British Columbians deserve to be able to afford a home, whether renting or owning, in their own province. The speculation tax primarily targets non-residents who own properties in designated urban centres and who do not rent them out at least six months a year.

Canadians who keep their primary residence in another province can avoid the tax by renting out their B.C. property for six months of the year. They will be able to offset a portion of the speculation tax with a non-refundable tax credit if they report income in B.C.

Those with multiple properties in B.C.’s designated cities that are vacant most of the year:

When a property owner holds onto vacant homes and benefits from rising property value, that is speculation. This behaviour is taking homes out of the housing market, driving vacancy rates lower, and making it harder for British Columbians to find a place to live.

Those who own multiple properties in urban centres that they opt to not rent out or live in will be captured by the tax. British Columbians with vacant property in urban centres will be eligible for a non-refundable tax credit that offsets a total of $2,000 in speculation tax payable and is immediately applied against the speculation tax owing. For homeowners with multiple properties, the tax credit will only apply to one property.

Speculation Tax Page 4 of 4

2018-03-28T22:31:35-07:000000003531201803 | Uncategorised |

Building Permits

February 7, 2018

The value of building permits grew 27.3% (seasonally adjusted) in December from the previous month. Increases in permits for residential (+50.6) and industrial (+12.8%) projects offset decreases for institutional (‑36.3%) and commercial (‑13.5%) buildings. The value of permits rose in Vancouver (+38.9%), where most of the province’s building activity occurs, while Abbotsford-Mission (+167.1%) and Victoria (+69.2%) both saw large increases as well. Kelowna (‑31.6%) saw a decrease in the value of permits issued.

Nationally, building permits increased by 4.8% in December. There was growth in Saskatchewan (+31.5%), British Columbia (+27.3%), and Quebec (+20.6%). Conversely, the value of permits contracted in Manitoba (‑25.4%), Alberta (‑10.5%), and Atlantic Canada (‑5.4%).

Regional Building Permits

Through December of 2017, the value of building permits issued in the province’s regions climbed 17.5% (unadjusted) above the level recorded in the same period last year. Investment intentions were up in most regions ranging from 7.3% in Kootenay to 156.0% in Nechako. Planned spending rose in Mainland/Southwest (+16.8%), where increases were seen for institutional and governmental (+64.9%), industrial (+60.2%), commercial (+17.2%), and residential (+12.2%) projects. Overall permits continued to increase in North Coast (+79.6%), Thompson/Okanagan (+23.4%), and Vancouver Island/Coast (+22.3%), while the only regions to see declines were Northeast (‑30.3%) and Cariboo (‑9.8%).

Data Source: Statistics Canada (Regional data produced by BC Stats from unpublished data)

2018-03-28T22:29:28-07:000000002831201803 | Uncategorised |

Housing starts

March 9, 2018

Housing starts in urban areas (areas with population of at least 10,000) in British Columbia fell by 26.1% (seasonally adjusted at annual rates) in February compared to January. The decrease was widespread with every housing type start registering declines in the month.

Across British Columbia’s census metropolitan areas, Victoria (+175.5%) was the only one in which housing starts grew in February. Kelowna saw the biggest decrease at 64.5% for the month.

Despite falling in half of the provinces, urban housing starts across Canada went up (+7.1%) in February. The increase was led by Prince Edward Island (+184.6%), Ontario (+25.8%) and Quebec (+17.2%). The increase was concentrated in apartment units (+22.8%) with all other housing types starts declining in the month. Saskatchewan (‑40.0%) registered the largest housing starts decline in February.

2016-12-17T14:12:12-08:000000001231201612 | Uncategorised |

Free markets & the Politician

Recent times have shown the inadvisability of politicians getting involved in changing markets.

In fact, I would suggest politicians should stay away from free markets, or those with heretofore limited regulation, if we want them to remain as such.

Measures taken (never timely) simply add layers of distortion. Dismantled with great difficulty at some future date when unintended consequences mount or the inflation of previous action becomes too much to bear.

The real estate market in Vancouver was naturally correcting going into the summer of 2016. Meanwhile the BC Liberals, in their infinite wisdom decide to implement a punitive 15% tax on homes purchased in the Greater Vancouver area by foreign nationals. Largely a knee jerk reaction to popular outcry. Globally, this tax was viewed as an assault on wealthy foreign nationals, not as an effective measure against rising house prices.

Managing to tax an already cooling market is one thing… alienating and offending an entire segment of the population is another. I would think it’s unwise. We will never know what the natural peak for housing prices was going to be in the Great Vancouver Area, but had it occurred, the effects would have sent an appropriate signal to investors and a cooling phase would gain strength from organic feedback.

Now we have a new & opposite form of distortion in the market; the government will step in and provide interest free loans (*be sure to read the fine print) up to $37,500 for folks that cannot afford a healthy downpayment. Does this not compound the housing affordability issue? Instead of letting the market ebb and flow, rise and fall of its own weight, we prop up and cajole.

Don’t get me wrong, I love to see my homes’ value rise, but millions of consumers’ maturation patterns are being impeded by a single and fundamental aspect of life – shelter. Contrary to popular belief, the political meddling needs to stop. Let the market take it’s course.

Debt is debt. This lovely gift from the Liberals is more debt. Plain and simple. Once again, the onus will be on the borrower, inflated by the government and backstopped by you, the tax-payer. The 6 big banks of Canada’s lending monopoly won’t hurt equitably when this unravels. Sure their dividends will decrease but they will repossess, repackage and write off. Meanwhile, an entire generation of freshly leveraged up, tired-of-going-nowhere-millennials, will feel the sting for the next decade with their underwater mortgages, foreclosures & bankruptcies.

Market cycles have a cleansing effect over time, separating the weak from the strong. When the fundamentals are stunted or encouraged you create incalculable & amplified crisis. Meddling with the natural process eliminates the chance for rebirth, for healthy growth and true long term stability. We want ebb & flow… we don’t want crisis.

— Stability does not equal the absence of volatility, volatility is necessary —

We need politicians with backbones strong enough to tell the public, you reap what you sow. Politicians strong enough to see their powerful & aging friends, lose money. Politicians with enough patience to not distort markets for votes, when the wave of consequence is sure to last decades. With enough presence of mind to see that the average citizen can find their own way into crippling debt without government encouragement.

If we can’t achieve this, we can rest assured that the next crisis will be larger than the last.

← 1 2 3 4 5 6 →