When the federal government tightened mortgage rules in 2012, overheated condo markets in Toronto and Vancouver were widely seen as the main target. But little more than two years later, it’s many smaller cities that are bearing the brunt of stricter regulations.
Winnipeg, Montreal and Moncton are grappling with a surplus of unsold condo units driven by a surge in new construction and a dwindling supply of first-time buyers in the wake of Ottawa’s decision in June, 2012, to limit mortgage insurance to amortization periods of 25 years or less from 30 years.
While deep-pocketed investors in Toronto and Vancouver stepped in to fill the void, the picture has been different in smaller markets where condo sales are driven largely by first-time buyers.
“It definitely had an effect on first-time buyers,” said Paul Cardinal, manager of market analysis for the Quebec Federation of Real Estate Boards.
“What’s not really intuitive is that you would have thought the most expensive markets would have been impacted more than the less expensive market, but that’s not necessarily the case.”
The downturn has been most painful in Quebec, where the boom in condo construction started in 2011 and 2012 as young buyers, armed with cheap mortgages, flocked to the housing market.
Roughly a third of Quebec buyers had taken out mortgages with 30-year amortizations – and that number rose to 40 per cent in Montreal, Mr. Cardinal said. He calculated that the change was the equivalent of raising interest rates by one percentage point.
Similar problems have plagued markets such as Moncton and Halifax, according to a recent housing market forecast from Re/Max. In Regina and Saskatoon, the number of unsold housing units hit a 30-year high, Canadian Mortgage and Housing Corporation said, the majority of them condos.
Winnipeg has also seen a surge of new condo construction since 2012 as builders rushed to cater to new immigrants under Manitoba’s provincial nominee program and retirees looking to downsize and spend their winters down south.
Last year was the first time in 30 years that the city saw more multifamily units under construction than single-family homes. The level of unsold inventory has been rising, as have rental vacancy rates, sparking concerns about overbuilding. “That’s something we’re keeping an eye on,” said Dianne Himbeault, CMHC senior market analyst. “At this point levels are above the five-year average in terms of completed an unoccupied units.”
Montreal in particular has been grappling with a glut of unsold condos for the past two years as builders haven’t scaled back their plans in the wake of softening demand. The city had a backlog of nearly 3,000 unsold condos last year, yet condo starts in Montreal rose 19 per cent, defying analyst expectations for a slowdown in new construction.
There are now nearly 20 condo sellers for every one buyer in Quebec City and downtown Montreal, well above the long-term average, said Hélène Bégin, chief economist at Desjardins Group.
In Gatineau, near Ottawa, condo prices have fallen 14 per cent, as stricter rules and federal government job cuts have sapped the confidence of new buyers.
Yet despite a rising stockpile of unsold units, prices in Montreal’s condo market haven’t fallen, rising 1 per cent last year, in large part because developers are choosing instead of offer generous incentives instead of price breaks. “Instead of taking $10,000 or $20,000 off the price, they’re offering to furnish it with the whole washer, dryer, dishwasher, stove and fridge,” said real estate agent Mike Abatzidis of Re/Max Du Cartier.
Desjardins’ Ms. Bégin expects to see a slowdown in new construction this year if the city is to avoid a serious downturn in its condo market. “If we don’t, the adjustment will be just more painful,” she said.
Not everyone agrees. In downtown Montreal, a joint venture backed by Chinese investors recently broke ground on one of the city’s most ambitious condo projects, a two-phase, 800-unit project known as YUL Condominiums.
“This is a world-class city which is still not seen as a condo market,” said Steve Di Fruscia, CEO of Tianco Group, the Vancouver-based company developing the project with Montreal’s Brivia Group. “It’s just a question of time to get the local community out of the rental market and into [condos].”
So far the project is 50-percent sold, but Mr. Di Fruscia says he confident the city’s glut of unsold condo inventory is merely the short-term growing pains of a city whose condo market is still developing.
“We are very bullish on Montreal,” he said. “We think it’s a great time to plant seeds. We are very hungry for some more real estate in the city.”
By: Tasmin McMahon, The Globe and Mail
Tuesday, February 24, 2015
Tuesday, February 17, 2015
WIN A GROUP OF 10 TICKETS TO WHL HOCKEY
RE/MAX wants to send your group of 10 to enjoy great local major junior hockey action! Enter for your chance to be sitting in the RE/MAX Home Team Contest Winners Section! Brought to you by your local RE/MAX agents!
Click here to enter ===> http://media.whl.ca/forms/remax_home_team_contest-f53
Contest open until February 28, 2015
Click here to enter ===> http://media.whl.ca/forms/remax_home_team_contest-f53
Contest open until February 28, 2015
Thursday, January 29, 2015
Canada Post cuts hit Abbotsford and Chilliwack this fall
Starting this fall, residents in Abbotsford and Chilliwack will no longer have mail delivered to their doors and will instead have to pick up mail from community mailboxes. The Fraser Valley cities will be among the first B.C. communities to lose door to door service.
Staff at the Chilliwack mail depot were notified of the change last week.
“Over the next several weeks and months, we will be able to determine in greater detail the impact on employees in your location,” said an internal memo.
More than 12,000 households in Chilliwack and at least another 15,000 in Abbotsford will be affected.
“They said that we’d be losing 40 to 45 percent of our workforce in the letter carrier delivery system by putting them into community mailboxes,” said Canadian Union of Postal Workers Local 741 President Peter Butcher.
“We have 23 routes altogether. With a 45 percent [reduction in staff] we’ll be looking at maybe 12 routes.”
Butcher is also worried about mail theft at community mailboxes, which have become targets for thieves. Canada Post is using more secure boxes, but Butcher doesn't believe that will make much of a difference.
“Mail theft is still a huge issue,” Butcher said. “We’re still getting break-ins and they’re not getting fixed. We had one in December and it’s still not fixed.”
Door-to-door service will also be cut this fall in Mission, Ladner and a handful of communities on Vancouver Island, as part of a cost-cutting plan to phase out home delivery across the country over the next five years. Rural service will not be affected.
By Jesse Johnston, CBC News
Staff at the Chilliwack mail depot were notified of the change last week.
“Over the next several weeks and months, we will be able to determine in greater detail the impact on employees in your location,” said an internal memo.
More than 12,000 households in Chilliwack and at least another 15,000 in Abbotsford will be affected.
“They said that we’d be losing 40 to 45 percent of our workforce in the letter carrier delivery system by putting them into community mailboxes,” said Canadian Union of Postal Workers Local 741 President Peter Butcher.
“We have 23 routes altogether. With a 45 percent [reduction in staff] we’ll be looking at maybe 12 routes.”
Butcher is also worried about mail theft at community mailboxes, which have become targets for thieves. Canada Post is using more secure boxes, but Butcher doesn't believe that will make much of a difference.
“Mail theft is still a huge issue,” Butcher said. “We’re still getting break-ins and they’re not getting fixed. We had one in December and it’s still not fixed.”
Door-to-door service will also be cut this fall in Mission, Ladner and a handful of communities on Vancouver Island, as part of a cost-cutting plan to phase out home delivery across the country over the next five years. Rural service will not be affected.
By Jesse Johnston, CBC News
Wednesday, January 28, 2015
Continuing low interest rates and a healthy stream of newcomers will ensure the good times keep rolling in 2015
VANCOUVER — Continuing low interest rates and a healthy stream of newcomers will ensure the good times keep rolling in 2015 for the Lower Mainland’s property development industry. But it also means pricing will continue to pose a challenge.
Three of B.C.’s biggest developers used adjectives like “great” and “incredibly positive” as they delivered a forecast last week to more than 1,100 industry insiders and politicians attending an Urban Development Institute luncheon.
“Vancouver is going to do well, everyone wants to be here,” declared David Negrin, president of Aquilini Development.
He said a recent crackdown on democracy protesters in Hong Kong is likely to enhance Vancouver’s prospects. “We’re very positive on Vancouver, and it’s going to continue for some time.”
Added Neil Chrystal, CEO of Polygon Homes: “We’re picturesque, have a healthy environment, we’re a clean, safe city offering excellent health care and educational opportunities. We are politically stable and close to Asia.
“I see no sign of the residential market slowing down. ... The market will remain balanced and stable in the year ahead.”
B.C. will experience net immigration in 2015 of some 34,600 immigrants and 2,600 provincial migrants, according to research by Mac Marketing Solutions, a company that plans and markets housing projects.
Mac, with offices in Vancouver and Calgary, forecasts that in subsequent years even larger numbers of both immigrants and Canadians will arrive, noting Alberta’s economic slowdown will make heading further west all the more attractive.
So, while a total of 37,200 newcomers are expected this year, the number should grow to 53,200 by 2018.
Combine that trend with low interest rates and a low vacancy rate in the region, and you have a recipe for continuing strong growth in the property development and real estate sectors. Unfortunately, that does not augur well for affordability.
Between 2006 and 2014, benchmark prices for all types of real estate in Metro Vancouver saw significant price jumps, according to Mac research, with the greatest increase — 46 per cent — recorded in Vancouver’s east side. West Vancouver and Vancouver’s west side both saw increases of 41 per cent.
Referencing the retail sector, Kevin Layden, CEO of Wesbild, said North American stores are downsizing as they move online. But even here, Vancouver is well positioned, never having enthusiastically adopted a big-box retail model.
The city has 13 square feet of retail space per capita, compared to a Canadian per capita rate of 19 square feet and the U.S.’s 30 square feet.
Commenting on Vancouver’s affordability crisis, Negrin cited the high cost of land and remarked: “Everyone is frustrated.” The only way to keep prices down is to increase density, he said.
Yet a Demographia study released last week on housing affordability argues density and urban land containment boost housing prices by restricting development of cheaper perimeter lands.
Chrystal argued development is being constrained by an overly complex and time-consuming municipal approval process. At UBC, he reported, the development approval process takes six months, compared to 12 to 30 months elsewhere in the region.
Added Negrin: “We have to find a way to streamline the process. Anything over one year is too long.”
Chrystal pointed to another challenge for Lower Mainland developers — offshore buyers are starting to purchase land for development that he said could lead to oversupply in certain markets.
They are also posing a challenge in terms of what they are prepared to pay for land acquisitions. “They may be parking money from offshore. We can’t compete on price.”
The developers complained of increasing costs for building materials and a stronger U.S. dollar, forcing higher costs. Prices for drywall, windows and steel were cited.
By Barbara Yaffe - The Vancouver Sun
Three of B.C.’s biggest developers used adjectives like “great” and “incredibly positive” as they delivered a forecast last week to more than 1,100 industry insiders and politicians attending an Urban Development Institute luncheon.
“Vancouver is going to do well, everyone wants to be here,” declared David Negrin, president of Aquilini Development.
He said a recent crackdown on democracy protesters in Hong Kong is likely to enhance Vancouver’s prospects. “We’re very positive on Vancouver, and it’s going to continue for some time.”
Added Neil Chrystal, CEO of Polygon Homes: “We’re picturesque, have a healthy environment, we’re a clean, safe city offering excellent health care and educational opportunities. We are politically stable and close to Asia.
“I see no sign of the residential market slowing down. ... The market will remain balanced and stable in the year ahead.”
B.C. will experience net immigration in 2015 of some 34,600 immigrants and 2,600 provincial migrants, according to research by Mac Marketing Solutions, a company that plans and markets housing projects.
Mac, with offices in Vancouver and Calgary, forecasts that in subsequent years even larger numbers of both immigrants and Canadians will arrive, noting Alberta’s economic slowdown will make heading further west all the more attractive.
So, while a total of 37,200 newcomers are expected this year, the number should grow to 53,200 by 2018.
Combine that trend with low interest rates and a low vacancy rate in the region, and you have a recipe for continuing strong growth in the property development and real estate sectors. Unfortunately, that does not augur well for affordability.
Between 2006 and 2014, benchmark prices for all types of real estate in Metro Vancouver saw significant price jumps, according to Mac research, with the greatest increase — 46 per cent — recorded in Vancouver’s east side. West Vancouver and Vancouver’s west side both saw increases of 41 per cent.
Referencing the retail sector, Kevin Layden, CEO of Wesbild, said North American stores are downsizing as they move online. But even here, Vancouver is well positioned, never having enthusiastically adopted a big-box retail model.
The city has 13 square feet of retail space per capita, compared to a Canadian per capita rate of 19 square feet and the U.S.’s 30 square feet.
Commenting on Vancouver’s affordability crisis, Negrin cited the high cost of land and remarked: “Everyone is frustrated.” The only way to keep prices down is to increase density, he said.
Yet a Demographia study released last week on housing affordability argues density and urban land containment boost housing prices by restricting development of cheaper perimeter lands.
Chrystal argued development is being constrained by an overly complex and time-consuming municipal approval process. At UBC, he reported, the development approval process takes six months, compared to 12 to 30 months elsewhere in the region.
Added Negrin: “We have to find a way to streamline the process. Anything over one year is too long.”
Chrystal pointed to another challenge for Lower Mainland developers — offshore buyers are starting to purchase land for development that he said could lead to oversupply in certain markets.
They are also posing a challenge in terms of what they are prepared to pay for land acquisitions. “They may be parking money from offshore. We can’t compete on price.”
The developers complained of increasing costs for building materials and a stronger U.S. dollar, forcing higher costs. Prices for drywall, windows and steel were cited.
By Barbara Yaffe - The Vancouver Sun
Thursday, January 22, 2015
Home prices fall in Calgary as real estate chill deepens
The Calgary housing market is cooling fast. New sales and listing data for the first half of the month have been released and the numbers aren’t pretty.
The number of homes trading hands has plunged 37 per cent compared to the first two weeks of January 2014, while the number of active listings surged 64 per percent.
There are now more than 4,000 homes on the market in Calgary versus about 2,500 in the same period a year ago.
“Calgary’s high-flying housing market has caught a serious chill,” Sal Guatieri, senior economist at Bank of Montreal, said Monday afternoon.
The price drop “is likely the start of a correction,” the economist said.
Until very recently, Calgary’s housing market was the top performing in the country alongside Toronto and Vancouver. Plunging oil prices have worked quickly to cool things down, however.
Oil prices have declined to about $47 (U.S.) a barrel, down more than 55 per cent from their June peak. The plunge has seen investment plans by companies in the energy patch cut back and led to layoffs. Most experts expect oil to remain at their current levels well into the new year.
A report from the Conference Board of Canada last week predicted that Alberta, which accounted for one in three new jobs in Canada last year, will contract in 2015 – an outlook Alberta Premier Jim Prentice disputed.
“More pain lies ahead,” BMO’s Guatieri said of the Alberta real estate market, noting pending sales in the province’s biggest city are also down 53 per cent year over year. “Ouch.”
BMO says economic growth in Alberta won’t contract this year but will slow to a crawl, or 0.5 per cent. That’s a sharp deceleration from the average annual growth rate of about 3.5 per cent in recent years, or the best clip in the country.
Global News
The number of homes trading hands has plunged 37 per cent compared to the first two weeks of January 2014, while the number of active listings surged 64 per percent.
There are now more than 4,000 homes on the market in Calgary versus about 2,500 in the same period a year ago.
“Calgary’s high-flying housing market has caught a serious chill,” Sal Guatieri, senior economist at Bank of Montreal, said Monday afternoon.
The price drop “is likely the start of a correction,” the economist said.
Until very recently, Calgary’s housing market was the top performing in the country alongside Toronto and Vancouver. Plunging oil prices have worked quickly to cool things down, however.
Oil prices have declined to about $47 (U.S.) a barrel, down more than 55 per cent from their June peak. The plunge has seen investment plans by companies in the energy patch cut back and led to layoffs. Most experts expect oil to remain at their current levels well into the new year.
A report from the Conference Board of Canada last week predicted that Alberta, which accounted for one in three new jobs in Canada last year, will contract in 2015 – an outlook Alberta Premier Jim Prentice disputed.
“More pain lies ahead,” BMO’s Guatieri said of the Alberta real estate market, noting pending sales in the province’s biggest city are also down 53 per cent year over year. “Ouch.”
BMO says economic growth in Alberta won’t contract this year but will slow to a crawl, or 0.5 per cent. That’s a sharp deceleration from the average annual growth rate of about 3.5 per cent in recent years, or the best clip in the country.
Global News
Subscribe to:
Posts (Atom)