Sign up to receive my real estate e-newsletter:
January 21, 2020
Vancouver East Detached Listings Plummet!
As we begin a new year and a new decade, the number of detached homes listed for sale in Vancouver East has dropped dramatically from more normal levels. As we go to press, the Eastside listings inventory is in the range of 350 houses. At the end of November 2019, there were 500 detached homes listed for sale in East Vancouver. In May 2019, there were approximately 700 listings, double the inventory home buyers have to choose from today. According to Multiple Listing Service (MLS) data from the Real Estate Board of Greater Vancouver, 74 detached homes sold in Vancouver East during December 2019. 106 houses changed hands in November 2019. So even with lower sales, an extremely low level of listings gives home buyers fewer choices in their price range and desired location. Thus, we are seeing very busy open houses once again, with multiple offer bidding starting to bump up prices once more. The Home Price Index Benchmark Price for a detached home on the Eastside has started to recover some of the value lost since 2017. December and January can traditionally be slower months for sales and listings, but so far, it appears that home buyers are coming back to the market, and are prepared to ‘pay the price’ to get back in.
January 21, 2020
False Creek Leases
In the 1970’s and 1980’s, the City of Vancouver built affordable housing on city-owned land in the 55-hectare False Creek South neighbourhood between the Burrard and Cambie bridges.
The affordable housing included co-ops, rentals and non-profit housing as well as low-rise strata units offered on 60 year leases.
Of the 825 market housing units, 669 of them are residential leasehold strata units and 48 are commercial strata units for a total of 717 leasehold strata units.
Leases are set to expire between 2036 and 2046.
The leasehold strata units are organized into 12 residential stratas, three commercial stratas and one residential/commercial strata.These 16 stratas are located within 12 different sites.
End of Lease Issues
The two main issues are:
Whether the city is going to renew any of the leases past the original term; and
What will the value of a lessee’s interest in the strata lot be when the lease ends.
The False Creek South Neighbourhood Association has formed a strata leaseholder society bargaining agency to negotiate lease renewal terms with the city.
In False Creek South the land is, and will continue to be, publicly owned.
For leasehold properties a purchaser is acquiring, by way of assignment of lease, a lessee’s interest in both the strata lot and the proportionate share of the common property. This gives the purchaser an interest in the improvements and the remaining term of an existing lease. The lease gives the purchaser an exclusive right to use the strata lot land associated with the improvements.
With leasehold tenure, the lease will end at some future date. When the lease ends, the buildings and the lands are surrendered back to the landowner—City of Vancouver—and the lessee is required to deliver vacant possession of the strata unit.
Model Strata Lot Lease
The Model Strata Lot Lease is the agreement between the land owner (the City of Vancouver) and each lessee in False Creek South. The Strata Property Act’s provisions specific to leasehold strata also govern the relationship between the tenant and landlord. The Model Strata Lot Lease is registered on title for all strata lots.
When Does the Lease End?
Each of the 16 strata developments in False Creek South have 60-year leases with definite end dates.
The expiries are grouped into three periods:
– autumn 2036;
– summer 2040; or
– autumn 2046.
Exception: Harbour Terrace at 1425 Lamey’s Mill Lane is the exception to this with a September 2050 expiry.
The model strata lot lease registered on title states the lease expiry date. There’s no right of renewal in favour of the tenant in any of the model strata lot leases.
Has Rent Been Paid until Lease End?
Almost all the strata lots in False Creek South are fully pre-paid. This means that a prior lessee paid the city all of the ground rent due until the end of the lease term. For these lots, a seller is selling the remaining term of the lease—an interest in the improvements and the current market value of the remaining right of exclusive use of the land to the buyer. For these lots, today’s value is based on current land value (and not what the rent paid to the city was).
However, not all strata lots in False Creek South are pre-paid.
What Happens at the End of the Lease?
In False Creek South, strata lot lessees have no rights to a renewal beyond the initial term of the lease. The city has the sole choice to end or renew a lease.
At the end of the lease, the lessee must vacate the premises and will receive a final payment from the city. This final payment is the city’s contractual and statutory obligation to purchase each leasehold tenant’s interest in the strata lot at a purchase price that represents its fair market value as agreed to by the city and the lessee or as determined through arbitration, valued as if the lease didn’t terminate. The city’s view is that this amount doesn’t include land value. At the end of the lease, the city will be purchasing the fair market value of the improvements constructed on the land it leased (those improvements could be up to 60 years old).
What Happens if the Lease gets Renewed?
If the city decides to renew a lease (or leases), the lessees are obligated to pay rent for the new renewal term. This rent will be the market rental value of the lands apportioned to the strata lot at the then-current constructed density.
The city also has the choice to determine the length of the new term. It must be at least five years long, but it could be any length of time. For all strata lot lessees, this future rental payment is a significant obligation. They can’t escape it, unless they sell their interest in the strata lot prior to the start of the renewal term. When selling their interest, they have no way to value the obligation today, as they don’t know if the leases will be renewed, or if they have a choice in accepting should a renewal be given. The city has provided rent prepayment options in the past, but isn’t required to do so in future.
Prospective purchasers and their Realtors should seek legal advice prior to purchasing the leasehold interest in the strata lot. The land lease rights and obligations should be the first thing discussed.
Courtesy of Greg Hamilton, City of Vancouver.
November 28, 2019
Temperatures Dropping – Housing Market Heating Up!
As temperatures drop in late fall and the Holiday season is just around the corner, homebuyers seem to have decided that now is the time to buy. However, there are fewer homes for sale at this time of year, thus creating the perfect scenario for an increase in prices.
According to Multiple Listing Service (MLS) statistics from the Real Estate Board of Greater Vancouver, 108 detached East Vancouver homes sold in October 2019.
This is comparable to the 109 houses that were sold in September 2019. Yet, only 73 Eastside homes changed hands in August of this year. Meanwhile, the other part of the supply and demand equation, the number of homes listed for sale, has dropped substantially since the spring. From a listing inventory of about 700 in April 2019, the current inventory of detached houses for sale is down to approximately 530. With a sales to listings ratio of roughly 1:5 pressure is being put on prices. The activity around new listings is very busy, with multiple offer bidding returning to the market, in some cases. While house prices are still below the historic highs of 2+ years ago, they appear to
have turned the corner and have started to move upwards. With mortgage rates stable, and homebuyers and lenders now used to the more stringent mortgage rules, pent up demand seems to be coming back to the market. As well, homesellers are used to a more competitive listings model and abandoning over-pricing strategies.
Traditionally, sales ebb as we get closer to the Holidays and New Year.
In the short-term we see this run continuing. Will we see more homesellers list their properties to take advantage of the activity now in the market? We’ll be watching closely to see if this continues into 2020.
November 28, 2019
When Renting a Spare Room – Caution!
Websites such as Airbnb, Vacation Rentals by Owner (VRBO), HomeAway and even Craigslist help property owners rent homes, apartments and spare rooms for short terms as well as longer terms.
However, if neighbours complain or police are called, strata councils and municipalities can take action.
Who has authority over short-term rentals?
Strata corporations and the local municipality both have authority.
1. Under the Strata Property Act, Part 8-Rentals, a strata corporation has the power to establish and enforce rental bylaws, which may include forbidding rentals or limiting the number of rentals. This is often because property owners don’t want to share their pool, exercise equipment, gardens, and visitor parking with short-term renters.
2. Municipalities. In BC, short-term rentals are under municipal jurisdiction. Rental periods of less than 30 consecutive days are typically considered tourist accommodation.
Depending on the municipality, short-term rentals may be:
-allowed under a specific bylaw; for example, Whistler, through its Tourist Accommodation Regulation bylaw;
-allowed under a residential zoning bylaw; for example, Vancouver, if the property owner is on site and runs a legal bed and breakfast (B&B);
-not allowed; or
-not dealt with.
Property owners must comply with bylaws
If a municipality permits short-term rentals, property owners have to comply with local zoning and business licensing requirements, strata bylaws and insurance requirements.
Property owners must understand:
-the tax implications set out by Canada Revenue Agency and the BC Government;
-the financial risks and liability involved in renting a home or room(s); and
-the insurance coverage required.
If property owners are renting their apartment, a room or their entire home, they must notify their insurance company.
“The key is disclosure,” says Trudy Lancelyn, Deputy Executive Director of the Insurance Brokers Association of BC. “Talk with your insurance broker because short-term rentals may affect coverage.”
Renting is a material change of use and home owners will typically be required to:
-change their insurance to rented dwelling coverage;
-remove all valuables, breakables, and jewelry, and
-pay a surcharge of as much as 25% on the premium.
A policy may include a “mysterious disappearance restriction.” This covers any items that go missing, and typically requires that there are signs of forced entry.
A strata council can fine a strata owner renting a property as long as the maximum amount of the fine ($500) is set out in the strata’s bylaws. The municipality may also issue fines or prosecute for municipal bylaw violations.
October 9, 2019
Falling Leaves, Falling Listings!
The fall housing market in Vancouver East seems to be finding its equilibrium as fewer listings and an increase in sales helps to balance the sales to listings ratio for detached houses.
According to Multiple Listing Service (MLS) statistics from the Real Estate Board of Greater Vancouver, 104 detached homes on the Eastside were sold in July 2019. August 2019 sales dropped to 73 houses. However, sales rebounded in September of this year climbing back up to 109 units. As we go to press, the inventory of active listings is just over 600. With a ratio of around 1:6, the detached market appears to have improved over September 2018, when 72 sales were recorded out of a listings inventory of over 800 (1:10 ratio). Meanwhile, the MLS Home Price Index for detached homes in East Vancouver is sitting at $1,358,700 up slightly over the last 3 months.
With mortgage interest rates stable and house prices down from the peak of the market, home buyers appear to be out on the hunt again. With open houses, showings, and sales picking up, some observers believe that the market is stabilizing, boding well for both sellers and buyers.
October 9, 2019
CMHC Now Accepting Applications for the First-time Home Buyer Incentive!
Canada Mortgage and Housing (CMHC) began accepting applications for the new federal $1.25 billion First-Time Home Buyer Incentive on September 2, 2019
There is no application deadline, but funds are available on a first-come, first-served basis.
Those buyers who may be thinking about whether they want to use this incentive should apply as soon as possible.
Available through CMHC, the incentive provides qualified first-time home buyers with an interest-free top up to their down payment in these amounts:
– resale home: 5% of a first-time buyer’s down payment to buy a resale home; or
– newly constructed home: 5% or 10% of a first-time buyer’s down payment to buy a newly constructed home.
Home buyers must have an income of no more than $120,000 and a minimum down payment of 5%.
For details phone 1-877-884-2642 or visit placetocallhome.ca.
July 26, 2019
May Sales Up, June Sales Down!
The real estate market on Vancouver’s Eastside continues to defy analysis, with conflicting evidence making market evaluation difficult. For example, the number of detached homes sold in East Vancouver in May 2019 jumped up to 124 (according to Multiple Listing Service statistics from the Real Estate Board of Greater Vancouver). This is higher than the same month in 2018, when 97 houses changed hands! Then, in June 2019 detached sales dropped to 85. With the number of Active Listings hovering around the 700 mark, downward pressure on prices continues. The Benchmark Price for a detached home in the Knight corridor sits at $1,344,800 at the end of June 2019 (based on the MLS Home Price Index). Compare this to the $1,578,800 Benchmark Price in November 2017.
The Fraser Benchmark Price of $1,402,400 is well down from the lofty heights of December 2017, when the Benchmark Price maxed out at $1,642,600. While the Bank of Canada prime interest rate has remained constant so far this year, the Federal ‘stress test’ continues to make mortgage financing more difficult.
The ‘test’ requires mortgagees to qualify for a mortgage rate 2% higher than the rate being offered by a traditional lender.
As we settle into a slow summer market (where both Buyers and Sellers, and their Realtors, tend to enjoy the beach over open houses!), we look toward the fall market for signs of renewed life in the housing market.
July 26, 2019
If a home is more than 60 years old, home owners may refer to it as having character merit or as “heritage”, regardless of how well it has been preserved or how much it has been altered over the years. Heritage is not just about age, it’s about authenticity. The real value is in a property that’s retained its original character, as well as its importance in the history of a place.
Municipal Heritage inventories and registers
Most Greater Vancouver area municipalities have an:
Official Heritage Inventory—a list of buildings, properties, and sites with characteristics or qualities contributing to the city’s heritage. Being on an inventory doesn’t “designate” or protect homes, properties, or sites. The inventory encourages site retention and rehabilitation.
Official Heritage Register—includes homes designated as heritage by a team of historians and city planners. The register lists buildings of special historical importance, along with homes that represent certain architectural styles. Some buildings on a heritage register are designated by a specific bylaw. In municipalities with an official heritage register, buildings may be categorized based on historical importance, such as Vancouver’s A, B, and C classes.
Homes in the highest heritage category can’t be altered without municipal approval, while homes in the lesser categories can be altered after the owners meet with municipal heritage planning staff to discuss ways of preserving the home’s exterior character. Owners of authentically restored older homes can apply to have them placed on the municipality’s Heritage Register, helping to preserve local history and, in some cases, enhancing their resale value.
Homes built before 1940 may have “character merit”, depending on the municipality, which may include the original massing and primary roof form, an original open front porch or veranda, original cladding, or replacement cladding consistent with pre-1940, original windows. Some municipalities, such as Vancouver, require an official character merit assessment before deciding a home has character merit.
Heritage neighbourhoods and zones
Municipalities may also designate areas or neighbourhoods as “heritage zones”. For example, the City of Vancouver has designated the First Shaughnessy Conservation Area (West 16th to King Edward, West 25th) and Arbutus Street to Oak Street.
Heritage revitalization agreements
Municipalities may offer legal, written agreements negotiated between a property owner and a municipality to provide non-financial incentives to help owners to conserve a heritage property. This agreement is registered on the property title.
May 26, 2019
Spring Weather Warms Up, Housing Market Doesn’t!
With winter weather well behind us, and housing prices lower, it was anticipated that more home buyers would return to the market. While house sales increased slightly from March 2019 to April 2019, house prices in Vancouver East have continued their steady march downward from the peak of the market roughly a year and a half ago. According to Multiple Listing Service (MLS) statistics from the Real Estate Board of Greater Vancouver, 53 detached homes were sold in Vancouver East in March 2019. Sales rose to 66 units in April 2019. With a sales-to-listings ratio of approximately 1:10, the Buyer’s market continues.
The MLS Home Price Index shows the Benchmark Price for a detached home on the Eastside at $1,357,200 as of the end of April 2019. Compare this to the $1,573,500 Benchmark Price from November 2017.
The federal government’s mortgage `stress test´ has made it more difficult for home buyers to qualify for financing, thus reducing the number of people qualified to buy. However, Detached homes are still a higher price today than they were 3 years ago. This means longer term homeowners are well ahead from what they bought their homes for originally. For Buyers, lots of supply, lower prices, and limited competition from other Buyers means now may be the time to make a move.
May 26, 2019
Provincial Grants & Rebates
Here are a few BC Grants & Rebates accessible to qualified individuals or properties.
1. BC Property Transfer Tax (PTT) First-Time Home Buyers’ Program
Qualifying first-time buyers may be exempt from paying the PTT of 1% on the first $200,000 and 2% on the remainder of the purchase price of a resale home priced up to $500,000. There is a proportional exemption for homes priced between $500,000 and $525,000. At $525,000 and above, the exemption is nil. Foreign entities and taxable trusts are not eligible for the exemption. Learn More. 1-888-355-2700.
2. BC Property Transfer Tax Newly Built Home Exemption
Qualifying buyers of new homes may be exempt from paying the PTT on a newly built home or newly subdivided unit priced up to $750,000, and receive a partial exemption on newly built homes priced $750,000 to $800,000.
3. BC Home Owner Grant
Reduces property taxes for home owners with an assessed or partitioned value up to $1.65 million. The grant is reduced by $5 for each $1,000 above the threshold and eliminated at $1.764 million (basic grant) and $1.819 million (additional grant). The basic grant:
– up to $570 for principal residences in the Capital, Greater Vancouver and Fraser Valley regional districts;
– an additional grant of $200 to rural home owners elsewhere in BC; and
– an additional grant of $275 to seniors aged 65+, those who are permanently disabled, and veterans of certain wars.
Learn More. email@example.com 1-888-355-2700
4. BC Property Tax Deferment Programs
– Property Tax Deferment Program for Seniors: qualifying home owners aged 55+ can defer property taxes.
– Property Tax Deferment Program for Families with Children: qualifying home owners who financially support children under age 18 can defer property taxes.
Learn More. Vancouver 604-660-2421. Elsewhere in BC: 1-800-663-7867
5. BC Seniors’ Home Renovation Tax Credit
Assists eligible seniors 65+ with the cost of eligible permanent home renovations to a principal residence to improve accessibility. The maximum refundable credit is $1,000 per tax year and is calculated as 10% of the qualifying renovation expense (maximum $10,000). Forms are available online. Learn more. 1-800-959-8281
6. Clean BC Plan
A new $679 million program of the BC Government provides a range of incentives including up to $6,000 for buyers of electric vehicles, and $2,000 to replace a fossil fuel heating system.
March 28, 2019
The Multiple Listing Service is Born!
In March 1951, a Vancouver Realtor® named John P. Roberts submitted a report to the Vancouver Real Estate Board on a new, co-operative form of listing property information. It was the first step in creating what is now known as the Multiple Listing Service, or MLS®, in Canada.
Roberts and others had long pondered a way for members to share listing information with a guarantee of co-operation. His report was circulated among the membership to gauge support, and with that support in hand, the board created the Co-operative Listing Bureau (CLB). Roberts was named chairman.
In the first year of its existence, progress was slow for the CLB. It had just 19 subscribers, each paying $30 per month to finance operations. Throughout the year, members met regularly at dinner meetings to nurture a growing spirit of co-operation.
The public learned about co-operative listing through advertisements in newspapers and on radio and TV, and from members themselves. After a year, the CLB doubled its membership, and by the end of 1952 it had reached more than 90.
Sales volumes rose in step, with a then unprecedented $2 million recorded in sales in 1952. Just two years later, the CLB recorded its first ‟million-dollar month” with over $1 million in sales volumes in June 1954.
Later that year, the name was changed from the Co-operative Listing Bureau to the Multiple Listing Service (MLS®) of the Vancouver Real Estate Board in order to comply with the Co-operative Associations Act.
In 1962, the MLS® trademark was assigned to the Canadian Association of Real Estate Boards, now the Canadian Real Estate Association (CREA) so Realtors across the country could use it.
Today, this innovation is the standard for reliable, accurate, and comprehensive real estate information in Canada.
January 22, 2019
Eastside Home Sales & Prices Down as 2019 Begins!
As we ring in the new year of 2019, 2018’s housing market finished off with a whimper.
According to the Multiple Listing Service (MLS) of the Real Estate Board of Greater Vancouver, only 42 detached homes were sold in Vancouver East during December 2018. This follows a 57 sale month in November 2018. Compare the last 2 months of 2018 with December 2017 when 88 detached houses changed hands. With sales dropping, the supply of listings for sale is too high to support the prices that were achieved as recently as last spring (2018). The Benchmark Price of an Eastside house on the MLS Home Price Index has slipped over 7% in December 2018 vs. the same month in 2017. In some neighbourhoods, prices have dropped in excess of 10%.
Traditionally, the number of homes listed for sale eases during the December holiday season. 2018 was no exception. The number of detached houses for sale on the Eastside is lower as we kick off January 2019. As of press time, there were roughly 530 Active Listings in Vancouver East. Meanwhile for 2019, Canada Mortgage and Housing Corporation predicts Canada’s housing markets should see a moderation in both housing starts and sales, while house prices are expected to reach levels that are more in line with economic fundamentals such as income, job and population growth. Even the Bank of Canada is watching the change to the housing markets, and started off 2019 with no change to their benchmark interest rate. Thus, most mortgage lenders have left their borrowing rates at the same levels as found in late 2018. The current housing market requires Buyers and Sellers to be well-informed before jumping into the action.
Call Norm for honest advice and guidance through a market in transition.
January 22, 2019
Cannabis Legislation and Commercial Real Estate
The Canadian cannabis market is forecast to reach $9.2 billion by 2025, according to the Canada Cannabis Report: 2018 Industry Report, released by New Frontier Data.
‘Combined, the Canadian medical and adult-use markets will rival that of California – which boasts the sixth largest overall economy internationally’, said Giadha Aguirre de Carcer, Frontier Data founder and CEO. This vast new market saw Canadians spend $4.9 million on cannabis in 2017, according to Statistics Canada.
‘I’m getting calls every week from entrepreneurs wanting to open retail outlets,’ said Barb Burrows, a commercial REALTOR®. ‘There’s a lot of interest and renters are willing to pay a premium in an already tight market’.
This interest has come about because the Federal Government legalized non-medical cannabis on October 17, 2018 through Bill C-54, the Cannabis Act.
In tandem, the BC Government established cannabis-related laws and regulations through the newly passed Cannabis Control and Licensing Act (CCLA) which governs the possession, use, and cultivation of recreational cannabis.
Here are some issues associated with commercial real estate and cannabis.
- Government oversight
Recreational cannabis is regulated by three levels of government.
- The federal government has legalized recreational cannabis.
- The provincial government is regulating and monitoring licensing.
- Municipalities have the power to determine if cannabis is sold in their jurisdiction and can require business permits and regulate land use and zoning. As a result, rules differ in each municipality.
While both public and private retail stores are permitted, the BC Liquor Distribution Branch will exclusively operate online sales.
The Liquor & Cannabis Regulation Branch (LCRB) will license and monitor compliance of public and private recreational cannabis stores. Private retail stores require a provincial license to operate and only licensed stores can sell cannabis, seeds or plants.
Prospective cannabis retailers must register their business with the Province and declare they own or lease or have an agreement to own or lease a proposed retail location for at least 12 months. They must then submit an application to the LCRB, according to law firm Lawson Lundell. As well, the retailer is restricted by the Province to holding, or an interest in, a maximum of 8 cannabis retail stores.
At the local level, there are a range of restrictions and rules. For example:
- Coquitlam is putting together a public engagement strategy to gather feedback before making any decisions.
- Maple Ridge plans policies which will allow retail cannabis operations through a Cannabis Retail bylaw.
- Port Moody is in the process of a public consultation.
- Richmond prohibits the retail sale of cannabis.
- Vancouver requires cannabis retailers to have a municipal development permit and a business license and display a cannabis store designation. There is even a map of approved retailers. To stop illegal cannabis shops, Vancouver has issued injunctions.
- West Vancouver had adopted policies banning retail cannabis operations.
- Rental Property
- The CCLA authorizes adults (age 19 and older) to grow up to four cannabis plants per household for personal use in residential leases entered into after October 17, 2018. The lease must state whether growing or smoking cannabis is prohibited or limited. If a lease doesn’t state this, landlords and tenants may negotiate terms regarding growing and smoking of cannabis.
- For landlords who have an existing lease with a tenant that prohibits or limits smoking, entered into before October 17, 2018, and the lease doesn’t expressly permit smoking cannabis, then the lease agreement is deemed to include a term that prohibits or limits smoking cannabis. The CCLA prohibits personal cultivation of cannabis under existing leases, except for federally authorized medical cannabis.
- Growing a limited amount of cannabis for health reasons is legal under the Access to Cannabis for Medical Purposes regulations (which accompany Bill C-45) and isn’t contrary to tenancy agreements or strata bylaws. Anyone growing federally authorized medical cannabis must follow federal guidelines. Landlords or strata councils which try to restrict use of medical cannabis may be violating the BC Human Rights Code and Canada’s Charter of Rights and Freedoms At the same time, there may be existing obligations to other tenants, including provisions for the quiet use and enjoyment of property.
November 22, 2018
Home Sales and Prices Down in Sluggish Fall Market!
The sale price of a detached home on Vancouver’s Eastside continued to drop, as sales failed to keep up with the supply of houses listed for sale.
According to the Multiple Listing Service (MLS) of the Real Estate Board of Greater Vancouver, 80 detached homes were sold in October, 2018, with 72 units changing hands in September, 2018.
With autumn listing inventories pushing 800, the sales-to-listings ratio is around 1:10. The lower demand vs. supply has resulted in lower sale prices. The MLS Home Price Index for Detached homes in Vancouver East is down 5.5% in October 2018 from the same month in 2017. We have seen even higher price reductions, depending on the type and location of the property.
According to Canada Mortgage and Housing Corporation (CMHC), higher mortgage rates, stricter borrowing requirements, and housing-related policy changes are amongst the reasons for the slowdown in the Vancouver market. The Bank of Canada’s key lending rate is now 1% higher than at the start of 2017.
With the Holiday season upon us, we anticipate both sales and listings to decrease through the beginning of January, 2019. However, one positive aspect of the Eastside detached housing market is that today’s prices are up 26% from October 2015!
September 30, 2018
Hot Summer Cools House Sales!
It was a summer with hot weather and very little rain, causing people to move at a much slower pace. The housing market followed suit with sluggish summer sales. According to Multiple Listing Service (MLS) data from the Real Estate Board of Greater Vancouver, 67 detached homes were sold in July, 2018 on Vancouver’s Eastside. August 2018 was even slower, with only 58 houses sold in Vancouver East.
Meanwhile, home prices in East Vancouver are down from this time last year, as supply is currently exceeding demand. As we go to press, there are approximately 835 detached homes listed on the Eastside. In July, the Bank of Canada raised its key lending rate by .25%, the fourth rate hike in roughly the last year. For example, most lenders are posting a 5 year closed mortgage at about 5.5%, with discounts to qualifying Buyers of up to 2% or more.
Combined with stricter lending rules implemented by the Federal Government at the beginning of 2018, home buyers are feeling the bite of tighter credit.
Therefore, it is very important for sellers to price their homes realistically to be successful in a softening market.
September 30, 2018
Where Is The Real Estate Market Headed?
Government Relations-Real Estate Board of Vancouver
To find out, we asked Bryan Yu, deputy chief economist at Central 1 Credit Union. Here’s his forecast:
Housing market conditions have shifted since the end of 2017, following the introduction of the federal government’s B20 measures. These measures require federally regulated financial institutions to stress-test conventional mortgages at the Bank of Canada-posted five-year rate, or the contract rate plus an additional 2%, whichever is higher.
The stress test cut about 20% of the purchasing power of a first-time buyer with a down payment less than 20%. Even a first-time buyer with a higher down payment was credit-squeezed and had to lower expectations for a first home, according to Yu.
Buyers looking to move up in the market are also being credit-squeezed because they must re-quality at a higher stress-tested rate, if they change lenders. This is causing households to stay where they are, or pay increased down payments through savings.
Provincial tax policy uncertainty, related to increases in the foreign buyer tax and the proposed speculation tax, will continue dampening detached home sales. Investors looking for a quick flip have largely disappeared.
For the second half of 2018, Yu forecasts resale transactions province-wide will decline by 11%, led by Vancouver and other urban centres. This decline results from tight credit availability and tighter housing policy rather than economic weakness or increasing interest rates.
A significant correction is not forecast.
Home sales have peaked, and the market is forecast to trend to a lower volume with slower price growth in 2019 and 2020.
Resale housing transactions are forecast to rise modestly in 2019, 2020.
Metro Vancouver detached and luxury markets will see modest price declines.
New housing starts will reach 42,000 units province-wide in 2018, a 3% decline from 2017. Starts will average 40,000 units in both 2019 and 2020.
Sales volumes are underpinned by ongoing economic and population expansion, growth in the housing stock, and still low borrowing costs.
July 24, 2018
Eastside House Sales Ebb in June!
With the arrival of summer 2018, the sales of Vancouver East detached homes slipped in June vs. the number of units sold in May. According to statistics from the Multiple Listing Service (MLS) of the Real Estate Board of Greater Vancouver, 141 Eastside houses were sold in May 2018. 97 sales were recorded in June 2018. With increases to the number of homes listed for sale, (now around 825) and the reduction in units sold, prices have shown signs of easing.
However, it depends on the type of house, improvements, and location factors as to whether or not a home has lost much value since last year. For example, homes on busier streets, ’fixer-uppers’ or rental stock tend to have lost more value than renovated houses in popular neighbourhoods. The Median Selling Price of a detached home in Vancouver East dropped over $100,000 by the end of June, over the previous month. This may be a reflection of the fact that the lower price range is the most active. Meanwhile, the Home Price Index (HPI) Benchmark Price for a Single Family Detached home is only off by 1.2% from 6 months ago. The impact of stricter lending rules imposed by the Federal Government may also be part of the equation, as we see some weakness in the detached market.
The strata Apartment market has started to hint at a change following a hot 2017 and start of 2018. Condo apartment sales on the Eastside dropped from 175 in May 2018 to 146 in June 2018, with Median Selling Price and HPI Benchmark Price softening.
The summer market, historically, is slower than the spring, as Vancouverites leave for vacation or take advantage of the ‘summer in the City’. With the housing market changing, it is extremely important to work with me on pricing your home correctly for sale.
July 24, 2018
New real estate rules come into force
New rules approved by the Superintendent of Real Estate (OSRE) to enhance consumer protection in the real estate industry came into effect June 15, 2018. The rules will be enforced by the Real Estate Council of BC and they will ensure that consumers have better information to make informed decisions, and that real estate professionals act with undivided loyalty to serve their clients’ best interest.
Among other things, these rules will:
- Increase transparency around commissions and who a real estate professional is representing in a transaction; and,
- Prohibit dual agency, except in limited circumstances.
Overview of Changes to Real Estate Rules
The changes to the rules will impact the way real estate professionals provide services to consumers.
- Real estate professionals are banned from practicing dual agency (representing both sides of the same deal—e.g. a buyer and seller, two buyers, or a landlord and tenant).
- An exemption to the ban has been established for remote locations underserved by real estate professionals; here it is not feasible for parties to a trade to be represented by separate real estate agents.
- Real estate professionals are required to give consumers more information about the services they can expect, the fees/benefits brokerages may earn from the sale, risks they should be aware of and where to go if they have a complaint.
The New Mandatory Disclosures for Consumers
- The Disclosure of Representation in Trading Services must be given to consumers before real estate professionals begin working with them, explaining the duties and responsibilities owed to clients and unrepresented parties.
- The Disclosure of Risks to Unrepresented Parties must be given to consumers to explain the risks of dealing with a real estate professional who represents another party to the transaction.
- The Disclosure to Sellers of Expected Remuneration must be given to sellers with each offer, explaining how the commission will be shared between the seller’s brokerage and the buyer’s brokerage.
- The Disclosure of Risks Associated with Dual Agency must be given to consumers in the rare cases of dual agency, explaining the risks of dual agency and how it benefits real estate professionals.
- The Agreement Regarding Conflicts of Interest Between Clients can be used when a conflict of interest exists between two current clients of the same real estate professional, where continuing to act for both of them would amount to dual agency.
The Real Estate Council of British Columbia, as the regulator of licensed real estate professionals, is responsible for educating real estate professionals about the requirements and enforcing compliance under the new rules.
May 24, 2018
Listing Inventory for Eastside Houses Increasing!
With the spring housing market upon us, the activity in Vancouver East has increased in both listings and sales. After a very sluggish start to the year, in detached home sales, home buyers became more active in March and April. According to statistics from the Multiple Listing Service (MLS) of the Real Estate Board of Greater Vancouver, 83 houses were sold on the Eastside in March 2018. 103 detached properties changed hands in April 2018. However, these gains in sales were offset by increases in the number of listings building up in the market. As we go to press, over 800 detached homes are listed for sale. With a sales-to-listings ratio of about 1:8, house prices have weakened slightly. The Home Price Index (HPI) for Vancouver East detached, shows a Benchmark Price of $1,544,100 at the end of April 2018. This is down from the $1,573,500 Benchmark Price in November 2017.
Meanwhile, the Attached-Townhouse and Apartment segments of the housing market have continued to be hot.
As of April 2018, the Benchmark Price of an Eastside Townhouse is up 21.1% compared to prices a year ago, with the HPI reporting an increase of 19.7% year over year for a Vancouver East Apartment.
With stricter lending rules being imposed by the Federal Government since the beginning of 2018, even the Attached sector of the Vancouver East housing market may feel the impact of these changes going forward. For now, at least in the detached segment of the market, home buyers are having more choices in their housing search and the heat of last year’s market has eased.
School tax is one of the services you are charged for on your annual property tax notice. The tax isn’t based on if you or your family use the public or private school system. The education system benefits all B.C. residents including people without children in school. You pay school tax to share in the cost of providing education in B.C.
If your property is located within a municipality, you pay school tax to your municipal office. If your property is in a rural area, you pay school tax to the province’s Surveyor of Taxes.
School tax is charged on every property in B.C. unless the property qualifies for an exemption.
Each year the province sets the residential school tax rate for each school district and is based equally on:
1. The total number of residences in the district
2. The total residential assessed value in the district
Generally, these rates decrease so that average provincial revenues per home only increase by B.C.’s Consumer Price Index rate of inflation.
Each year the province sets the school tax rate for each non-residential property class. Generally, these rates decrease each year as average values within a property class rise faster than inflation.
Additional School Tax on High-Valued Properties
Starting in 2019, an additional school tax applies to most high-valued residential properties in the province, including:
- Detached homes
- Stratified condominium or townhouse units
- Most vacant land
The additional school tax does not apply to non-stratified rental buildings with four or more housing units.
For mixed-use properties, only the residential portion of the property’s assessed value above $3 million will be taxable.
The additional tax rate is:
• 0.2% on the residential portion assessed between $3 million and $4 million
• 0.4% tax rate on the residential portion assessed over $4 million
School Tax Revenue
Revenue from school tax represented approximately 35% of the $5.498 billion spent by the Ministry of Education in 2015/16.
March 28, 2018
BC budget includes new real estate taxes and spending commitments
Housing was the dominant issue in the recent provincial budget.
The government released a 30-point housing strategy aimed at reducing housing demand, curbing tax fraud, building affordable housing, and increasing security for renters.
New tax measures include increasing property taxes and property transfer taxes on residential properties valued above $3 million, expanding the foreign buyer tax, and implementing a housing speculation tax.
The province will:
• Invest $6 billion in affordable housing to create 114,000 homes over the next 10 years.
• Enhance local government capacity to build and retain affordable housing.
• Require developers to collect and report comprehensive information about the assignment of pre-sale condo purchases.
• Track beneficial ownership information.
• Collect additional information to increase transparency and strengthen enforcement in real estate.
- The province will implement a new speculation tax on residential properties, targeting foreign and domestic home owners who don’t pay income tax in BC. This includes those who leave their homes vacant.
- The tax will apply to the Metro Vancouver, Fraser Valley, Capital, and Nanaimo Regional districts and in the municipalities of Kelowna and West Kelowna.
- In 2018, the tax rate will be $5 per $1,000 of assessed value. In 2019, the tax rate will rise to $20 per $1,000 of assessed value.
- The province will administer the tax and will collect data to enforce it including, social insurance numbers, household information, and world-wide income information.
Foreign buyer tax:
- Effective February 21, 2018, the foreign buyer tax will increase to 20% from 15% and will be extended to the Fraser Valley, Capital, Nanaimo, and Central Okanagan Regional Districts.
- If the property is located in the Capital Regional District, Fraser Valley Regional District, Regional District of Central Okanagan, or Nanaimo Regional District, and the property transfer is registered on or after February 21, 2018, there are transitional rules available.
Property transfer tax (PTT):
- Effective February 21, 2018, the Property Transfer Tax on residential properties ve $3 million will increase to 5% from 3%.
Provincial school tax:
- Beginning in 2019, the provincial school tax will increase on most residential properties in excess of $3 million.
Database on pre-sale condo assignments:
- The province will require developers to collect and report comprehensive information about the assignment of pre-sale condo purchases. The information will be reported to a designated government office and shared with federal and provincial tax authorities to ensure taxes are paid.
Online accommodation PST and MRDT:
- Online accommodation platforms are enabled to collect and remit the Provincial Sales Tax and Municipal and Regional District Tax (Hotel Room Tax).
Property tax treatment for ALR land:
- As part of the Agricultural Land Reserve (ALR) review, the province is examining residential land in the ALR to ensure land is used for farming.
Compelling access to Multiple Listing Services (MLS):
- The province plans to enable tax administrators to compel access to information relevant to property transfers, such as information held in a MLS database.
Beneficial land ownership registry:
- The province will require additional information about beneficial ownership on the PTT form.
- Administered by the Land Title & Survey Authority LTSA, the information will be publicly available and shared with federal and provincial tax and law enforcement authorities. Legislation will be introduced to require BC corporations to hold accurate and up to date information on beneficial owners in their own record offices and make it available to law enforcement, tax and other authorities.
TAX FORCE ON MONEY LAUNDERING AND TAX EVASION
The province will work with the federal government to formalize a multi-agency working group on tax evasion, money laundering and housing.
RESIDENTIAL TENANCY BRANCH
Increased funding to reduce wait time, improve service and deal with disputes more quickly, as well as strengthening the Residential Tenancy Act and the penalties for those who repeatedly break the law.
March 28, 2018
Fewer house buyers for Eastside detached properties!
January and February 2018 proved to be quiet months for sales of detached houses in Vancouver East. According to statistics from the Multiple Listing Service (MLS) of the Real Estate Board of Greater Vancouver, only 45 Eastside detached homes changed hands in January 2018. Sales edged up to 77 in February 2018. The sluggish sales were assisted by several factors, from inclement weather, to another hike in interest rates from the Bank of Canada.
The Bank of Canada has now increased the trend-setting prime rate by .75% in the last year. The MLS Home Price Index (HPI) shows Eastside house prices easing slightly over the last 6 months. The Benchmark Price for a detached home in Vancouver East sits at $1,560,400 (at the end of February 2018)
The busiest segment of the Eastside housing market has been ATTACHED and APARTMENT sales. Prices for these types of homes continue to rise.
As we finish off the winter market, we can expect listing inventories to build, as the spring market is traditionally the busiest time of year for selling and buying real estate.
As we go to press the listing inventory for Vancouver East detached homes is 636, attached homes are at 132 units and apartments 196. We’ll see if sales keep up with listing inventories with the arrival of spring, 2018.
January 19, 2018
Vancouver’s New Housing Strategy
THERE ARE 120 ACTIONS IN THE STRATEGY WHICH FALL UNDER THE FOLLOWING 10 PRIORITIES:
1. Shift toward the “right supply” by increasing rental and social housing near transit and arterials, like the Broadway corridor, Nanaimo station, 29th Avenue station, and Olympic Village station. Low-density neighbourhoods will see new infill housing and multiple homes on a single lot, as well as townhouses and low-rise apartments in areas with public amenities. The city will also implement a Moderate Income Rental Housing Pilot Program (see point 3).
2. Limit speculation and stabilize land value by working with senior levels of government to develop tax and financial regulations including a speculation and flipping tax, increased Property Transfer Tax on luxury properties, and closing loopholes around capital gains taxes.
3. Increase rental protection and affordability to ensure rents remain affordable after redevelopment. The city plans to preserve the existing 90,000 rental homes in Vancouver by lowering the trigger for one-for-one replacement of rentals. A new Moderate Income Rental Housing Pilot Program will incentivize developers through density bonusing to build 100% rental buildings where 20% of the units are permanently affordable for households earning $30,000-$80,000 annually. Over the next decade 2,000 co-op homes will also be built.
4. Review city processes for housing, rezoning and development to simplify city approaches. Reduce processing times and speed up the rezoning and community amenity contributions (CAC) process for market rental development applications.
5. Support diverse ways of living by permitting collective housing by amending the Zoning and Development By-Law to permit six or more unrelated roommates in single-family areas.
6. Provide housing for homeless residents by requesting funding to build 1,200 units of temporary modular housing on city-owned sites in the next two years.
7. Develop a new 10-Year Affordable Housing Delivery and Financial Plan to support development of 12,000 social, supportive and co-op homes.
8. Improve livability of single room occupancy (SRO) hotels by replacing 50% with new self-contained social housing. The city will also establish an SRO revitalization fund to renovate 10 privately owned buildings.
9. Launch the new Social Purpose Real Estate Incentive Program to support non-profits and co-ops who own their land and buildings to redevelop and expand affordable housing.
10. Build five new Aboriginal housing developments through partnerships with Aboriginal agencies, and create a 10-Year Aboriginal Housing strategy in support of the city’s ongoing efforts for reconciliation.
The strategy builds on measures Vancouver is already taking, including the Empty Homes Tax; short-term rental regulation; and temporary modular housing for low income and homeless residents.
NUMBER OF NEW HOMES COMING
The goal: 72,000 new homes to be delivered in 10 years.
- 50% of new homes targeted at families earning less than $80,000
- 29,000 homes (40%) will be for families
- 48,000 homes (55%) will be for renters
- 12,000 homes will be social, supportive and non-profit co-operative homes; 4,100 will have supports
- 20,000 homes will be secure long-term market rental homes
- 4,000 new laneway homes will provide ground-oriented homes for couples and families
ADDRESSING SPECULATION AND HOUSING DEMAND
Vancouver has seen rapid home price growth which city officials believe is “fuelled by more than just households looking for primary homes.”
So far, the strategy has been to implement the Empty Homes Tax and the Short-Term Rental regulations.
The next step is a pilot program directed at newly constructed housing for residents who live and work in Vancouver. This will include:
- A rezoning policy to require developers to market pre-sale strata units to residents already living and working in Metro Vancouver before units are marketed and sold nationally or internationally; and
- Additional measures such as requiring the developer to limit bulk sales, and include terms in the contract of purchase and sale to prevent the flipping of assignments for profit
January 15, 2018
East Vancouver Detached Housing Stabilizes
Following strong demand in the late spring of 2017, which resulted in a big price jump, the year ended with Vancouver East detached homes in a more stable market. According to Multiple Listing Service (MLS) statistics from the Real Estate Board of Greater Vancouver, 88 houses were sold on the Eastside in December 2017. This is down slightly from the 94 detached sales in November 2017. Meanwhile, the number of Vancouver East houses listed for sale dropped considerably in December 2017. As we go to press in early January 2018, the listing inventory is around 550 units. With a sales-to-listings ratio of about 17%, the new year begins with reasonable demand vs. supply in the Eastside detached market.
Mortgage rates continue to be favourable, despite some increases in 2017. Major lenders are advertising 5 year closed mortgages at rates of about 5%. However, with discounts of 2% or more to qualified home buyers, financing continues to be competitive between lenders.
One of the many Federal Government changes to try to cool the housing markets in Canada’s major cities came into effect on January 1, 2018. Home buyers who don’t require mortgage insurance must still qualify for their mortgage at a higher rate.
Under the new rules from the Office of the Superintendent of Financial Institutions, the minimum qualifying rate for uninsured mortgages will be:
- The greater of the Bank of Canada’s 5 year benchmark rate or
- The contractual mortgage rate plus 2%
It will be interesting to see if this new ‘stress test’ negatively impacts the housing market, particularly the condo market, which has been running hot through the latter part of 2017!
November 27, 2017
Detached Home Sales Ease, Condo Sales Boom!
With the prices for Vancouver East detached homes still high, it seems that homebuyers have turned their attention to the condo apartment and townhome markets. As sales for detached homes have slipped this fall, sales for apartments have been at a frenzied pace. According to Multiple Listing Service (MLS) statistics from the Real Estate Board of Greater Vancouver 106 detached homes sold in East Vancouver during October 2017. This is a slight increase in sales from the 95 houses sold in September 2017.
Meanwhile, 150 apartments were sold in October 2017 vs. 129 units in September 2017. While house prices have eased somewhat from the peak prices of May 2017, condo prices were at an all-time high in October 2017. This is clearly a result of low inventory vs. high demand. Multiple offer situations have driven up condo prices nearly 20% from a year ago. Tougher Federal Government lending rules are coming to mortgage lenders in January 2018. (See accompanying story). It seems that Buyers are desperately trying to buy and complete on their purchases prior to January 1, 2018.
In closing, the sales to listings ratio for detached homes on the Eastside stood at about 14% (close to a Buyer’s Market) while the sales to listings for apartments was a whopping 79% (definitely a Seller’s Market).
Detached home sellers need to price their properties sharply today, but prices are still higher than they were at the beginning of the year. All we can say about the condo apartment market right now is that it is great to be a Seller!
November 27, 2017
New Requirements for uninsured mortgages….
Home buyers who don’t require mortgage insurance—those with a down payment of 20% or more—must still qualify for their mortgage at a higher rate as of January 1, 2018.
Canada’s Office of the Superintendent of Financial Institutions (OSFI) announced these rules changes on October 27, 2017.
Draft changes were released last summer for stakeholder feedback. The Canadian Real Estate Association provided a submission.
Under the new rules, the minimum qualifying rate for uninsured mortgages will be:
¨ the greater of the Bank of Canada’s five-year benchmark rate or
¨ the contractual mortgage rate plus 2%
OSFI will also require lenders to enhance their loan-to-value (LTV) limits and restrict certain lending arrangements designed to circumvent LTV limits.
These changes apply to federally regulated financial institutions and are the final revisions to Guideline B20: Residential Mortgage Underwriting Practices and Procedures.
There could be a rude surprise for borrowers who signed a purchase and sale agreement for a property closing after December and have not applied for a mortgage before the new rules kick in, according to the Canadian Home Builders’ Association (CHBA).
“Unless the OSFI creates an exception for such cases, some of these buyers will have to seek higher-cost non-bank financing to close (or may not be able to close at all),” said CHBA, which is working with officials from the Department of Finance to get OSFI to put transitional rules in place for buyers who find themselves in this situation.
CHBA notes: “Builders could be left with empty units while buyers could lose their hard earned deposits.”
The new stress test will not apply to home owners renewing their uninsured mortgage with their existing lender. Home owners who move to a different lender will be treated as a new borrower and will have to qualify at a higher, stress-tested rate.
November 27, 2017
Residential Underground Storage Tanks
How many are still in the ground in BC? No one knows precisely because they were never registered and there wasn’t a permitting system. City of Vancouver staff estimate there are between 10,000 and 20,000 still in the ground in Vancouver alone.
Underground storage tanks (USTs) were extensively used until the 1970’s when natural gas became readily available. They’ve often been forgotten and lie buried in yards and under basements and decks.
Telltale signs of USTs include vent and fill pipes or copper lines sticking out of lawns, or the ground close to buildings.
The life span of a tank is about 25 years. As tanks age and corrode, the toxic substances they contain can leak and leach into soil, neighbouring properties, and groundwater. They can also cause a fire or explosion.
Cleanup costs vary. There are cases where home owners have paid as much as $123,000, according to Mike Mangan, a real estate lawyer.
In BC, residential fuel storage tanks are regulated by the BC Fire Code, Part 4.
Toxic leaks are governed by the BC Environmental Management Act and the Contaminated Sites Regulation.
Municipalities, including Vancouver, typically also have bylaws, policies, and additional requirements for removing or abandoning tanks. Local fire departments usually administer them.
According to the Ministry of Environment and Climate Change Strategy’s Remediation Liability Overview, those who can be held responsible for causing contamination include the current owner, a previous owner, and even a producer or transporter of the substance that caused the contamination.
Tanks in the City of Vancouver
Tanks still in the ground in Vancouver are regulated by:
¨ The City’s Fire Bylaw which follows a CCME Code of Practices for tank removal and decommissioning; and
¨ The City’s Sewer and Watercourse Bylaw No. 8093, section 5.3, which requires property owners to remove a tank that will not be reused or has been out of service for two years.
Have an interesting idea for a newsletter article? Contact Norm and watch this page regularly for updates!