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OTTAWA - The federal government, concerned about sky-high real estate prices in Vancouver and Toronto, announced Friday it will make new buyers come up with a heftier down payment starting in mid-February.
The move was part of a three-pronged effort aimed at lowering the risk that taxpayers will have to bail out lenders in the event the bubble bursts in the housing markets in those two cities.
Effective February 15, 2016, the minimum down payment for new Canada Mortgage and Housing Corp.-insured mortgages will jump from five to 10 per cent – though that extra five per cent will apply only to home purchase prices exceeding $500,000.
In other words, the current minimum payment on a $500,000 house would be $25,000. If the house costs $600,000 a 10 per cent charge is levied only on the extra $100,000, bringing the minimum payment to $35,000.
The new rule will not apply to Canadians who already hold mortgages.
The measures also won’t impact houses sold for $1 million or more, since they already required a minimum 20 per cent down payment.
Morneau, in a statement to reporters, made clear his concern was Vancouver and Toronto.
He noted that the average price of homes sold across Canada in October was $453,000, well under the threshold.
The “benchmark” price for a detached home in Greater Vancouver last month, however, was just over $1.2 million, according to the Real Estate Board of Greater Vancouver.
“Targeting higher-price properties will minimize the impact on many first-time home buyers and (on) regional housing markets where activity is more moderate, while limiting risk and taxpayer exposure to the elevated housing markets in Vancouver and in Toronto,” he said in a sttement.
“Moreover this measure will increase home owner equity, which plays a key role in maintaining a stable and secure housing market and economy for the long term. This protects all homeowners, including many middle-class Canadians whose greatest investment is in their home.”
Morneau was asked by The Vancouver Sun why the federal government is targeting first-time buyers in cities like Vancouver, while doing nothing to deal with the impact of speculators and foreign buyers driving up prices.
“You know, we are taking measured approaches to make sure we protect Canadians,” he replied.
“We are looking at how we can ensure the Canadians who already have homes recognize there is a stable housing market, and those people that are aspiring to have homes can be assured that their biggest financial investment is in a stable and effective market.”
Morneau got quick support Friday from economist Jock Finlayson, executive vice-president and chief policy officer at the B.C. Business Council.
“I think this move makes sense,” Finlayson told The Sun.
“With an almost stalled Canadian economy, policy-makers need to be looking at tools other than interest rates as a means to address concerns about overheated housing markets in some major metropolitan areas.
“This change should not affect first-time home buyers in most Canadian cities, but will affect some in the Greater Toronto and Metro Vancouver markets.
“It is a prudent measure, in my view, but it is unlikely to have a significant impact on the high end of the housing market where buyers typically have the ability to make substantial down payments.”
Morneau’s move today was part of a three-pronged effort to protect Canada from the potential impact of an expanding housing market price bubble that bursts.
- CMHC is increasing guarantee fees charged to lenders to cover the cost of CMHC-sponsored securitization programs, National Housing Act mortgage-backed securities, and Canada Mortgage Bonds.
- The office of the Superintendent of Financial Institutions said it will consult on and “update” regulated capital requirements for residential mortgages held by federally-regulated lenders, like banks, trust companies and credit unions, and for private mortgage insurers.
The recently opened outlet shopping mall at Vancouver International Airport is receiving some international attention: McArthurGlen Designer Outlet Vancouver in Richmond has won the title of the ‘best outlet centre in the world’.
The awards were presented last month at MAPIC, an annual international retail property conference that attracted 8,000+ delegates from the retail property industry, 2,000+ retailers, 470 brands, and 700 exhibiting companies from 74 countries. This year’s event was held in Cannes, France.
Other awards at MAPIC included the best redeveloped shopping centre (Alegro Setubal in Lisbon, Portugal), best retail urban project (Markthal in Rotterdam, Netherlands), and best new shopping centre (Milaneo in Stuggart, Germany).
A spokesperson with MAPIC did not respond to a request for comment on why McArthurGlen’s Vancouver property is the best outlet centre in the world. However, the mall has been a massive success since its opening on July 9.
Approximately 160,000 people visited the mall during the four day opening weekend, making it the most successful McArthurGlen centre opening in the world. By early-October, the mall recorded 600,000 people, which is 66 per cent higher than original estimates.
Location and accessibility are the driving factors of the mall’s success. McArthurGlen’s 20 other global properties are all located in rural European areas, but the Sea Island mall is located within close proximity to a major metropolitan area’s downtown core and is immediately adjacent to rail rapid transit – the SkyTrain Canada Line’s Templeton Station. It is estimated that approximately 40 per cent of the mall’s traffic is made from SkyTrain.
Currently, approximately 50 stores occupy two-thirds of the mall’s 240,000 square feet of available retail space. More tenants will be announced over the coming year.
A future second phase, possibly by 2017, will extend the mall’s footprint towards the Arthur Laing Bridge. It will add another 140,000 square feet with space for about 50 stores, depending on the final configuration.
Revenue from McArthurGlen’s operations on land managed by the Vancouver Airport Authority help fund the airport’s capital projects and operational costs, thereby reducing the pressure to raise user fees for passengers and airlines.
Source; Vancity Buzz
In Vancouver, November housing sales were 46.2 per cent above the 10-year sales average for the month and the second highest ever for the month.
Even during what is considered one of the slowest months of the year for real estate, Canada’s most expensive housing market continued its torrid pace.
The Real Estate Board of Greater Vancouver said it recorded 3,524 sales across the multiple listing service in November, a 40.1 per cent increase from a year ago. Home sales were down 3.3 per cent from 3,646 a month earlier.
“November is typically one of the quietest months of the year in our housing market, but not this year,” said Darcy McLeod, president of the board. “The ratio of sales to homes available for sale reached 44 per cent in November, which is the highest it’s been in our market in nine years.”
November sales were 46.2 per cent above the 10-year sales average for the month and the second highest ever for the month.
Housing sales activity is soaking up supply in the market, with the total number of properties listed for sale on MLS at 8,096 just in November, a 35 per cent decline compared to a year ago and a 15.4 per cent drop from a month earlier.
The impact on prices has been obvious. The board’s composite benchmark price for all residential properties in the Metro Vancouver area rose to $752,500, a 17.8 per cent increase from a year ago.
Detached properties, one of the most sought after commodities in the region’s real estate market, led the way on price increases. Based on the board’s benchmark index, a detached home is now $1,226,300, a 22.6 per cent increase from a year ago.
The average sale price of a detached home climbed to $1,579,170 in Vancouver in November.
An artist’s rendering of Vancouver House, by the Howe Street on ramp to the Granville Street Bridge. The building, which is under construction, was awarded Future Project of the Year at the World Architectural Festival in November 2015.
Step aside stale, staid and unimaginative. There’s a new word in town to describe Vancouver architecture: exemplar.
That is the term international judges used to describe Vancouver House, which snagged Future Project of the Year at the World Architectural Festival in Singapore this week.
The twisting building under construction at Howe Street and Beach Avenue “generates an exemplar new urban typology,” judges said.
“It is a delightful project that will impact positively on many future municipality- and developer-led agendas for cities across the world.”
It may take a moment for that to sink in. A Vancouver building is set to influence world architecture.
Then again, maybe it shouldn’t come as such a surprise. After all, the planned 59-storey Westbank tower is designed by Bjarke Ingels, a Copenhagen-based firm that has conjured up inspirational projects around the world.
Calgary’s Telus Sky Tower, VIA 57 West in Manhattan and the Hualien Residences in Taiwan are just a sample of the firm’s visually stunning projects that are under construction. It also has a raft of completed and proposed projects that — like Vancouver House — push the boundaries of architectural design.
Leslie Van Duzer, a professor at University of B.C.’s School of Architecture and Landscape Architecture, said the award was great news for the developer and the city.
“Vancouver House represents the confluence of an enlightened planner, a visionary developer and an architect who makes a practice of turning society’s detritus (in this case, a site with sprawling off-ramps) into gold. Such rare alchemy is most worthy of this significant global prize,” Van Duzer said in a written statement.
“Vancouver, long known for its exemplary urban planning, may yet earn a sustained place on the world stage for its architecture.”
Vancouver House’s unique design comes in part thanks to the awkward plot of land it is being built on. A 30-metre setback from Granville Street Bridge left the company a triangular base of just a few thousand square feet to work with.
About a dozen floors up, the building gradually expands into a rectangle, increasing its square footage while creating the appearance of a twist.
Ian Gillespie, the president of Westbank, called Bjarke Ingels’ architecture “an evolutionary moment in Vancouver’s design history.”
“This is an incredible win for Vancouver House and Vancouver; it recognizes our vision for city-building. Every city needs to have a few special moments that take your breath away, and Vancouver has lacked that until now,” he said in a news release.
Before the building was named project of the year, it beat competing residential projects from cities around the world for top prize in that category. Among the entrants was Nelson on the Park, a design for a residential tower at Nelson Street between Burrard and Thurlow streets in Vancouver’s West End.
The design features a rooftop pool and patio covered by airy, transparent cubes of what appear to be glass and mirrors.
Other entrants in the category are planned for or under development in cities on nearly every continent.
Judges at the World Architectural Festival include architects who have won festival awards in the past and peer-respected industry professionals, according to the festival.
City employees were not available to comment on the award, but the city’s planning and development branch released a brief statement: “The award is a wonderful recognition of the changing face of Vancouver.”
Neither Gillespie nor a designer could be reached for interview late Friday.
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This house on Maple Street in Vancouver sold recently for $2.9 million, $1 million over the asking price.
Photograph by: Ric Ernst , VANCOUVER SUN
A Maple Street home in Kits Point, with an asking price of $1.9 million, fetched $2.9 million last week — $1 million over the asking price. The bidder, one of 17, was a local buyer.
Across the way, on Chancellor Blvd. near UBC, realtor Andrew Hasman sold a home two weeks ago for $5.3 million — nearly $600,000 over asking. The sale followed a six-party bidding war won by a 22-year-old university grad whose parents live in China.
Is housing just another commodity in a free-market system? Or ist it a social necessity, requiring a degree of government regulation? A new Insights West poll certainly suggests people here favour some government intervention.
When the typical price for all residential properties across the region — including condos — reaches $736,000, up 15.3 per cent from a year earlier, and bidding wars drive up prices, it surely is time to ask that question.
The price for a typical detached home in Metro Vancouver, at nearly $1.2 million, jumped more than 20 per cent in the past year.
Now, it is true that the region’s economy is performing well at the moment, probably better than any other metropolitan area in Canada. But few Vancouver-area residents got 15- or 20-per-cent pay raises in the past year.
Median family income in Vancouver in 2013, according to Statistics Canada, was $73,390. An income of about $150,000 is required for mortgage payments on an $800,000 Vancouver home.
Where are the nurses, teachers and firefighters supposed to live?
And it is worth noting that the housing stock already was unaffordable last year. With one-year price increases of 15 to 20 per cent, it’s no stretch to say the property market has grown too costly for those the region’s housing is primarily meant for — inhabitants who live and work here.
At least part of the problem is obvious. Many who do not live in the area, but have greater means than those who do, have discovered the glories of Canada’s west coast and flooded into the market, taking advantage of low interest rates and a weak dollar.
Their numbers will fluctuate in coming years, depending on economic factors. But foreign buying is likely to continue playing a role in Vancouver.
These buyers inevitably boost competition for local housing, forcing prices up, at both the top and bottom ends of the market, due to a trickle-down effect.
Prices have climbed to the point where those who might consider selling do not, for fear of not having affordable alternative housing to turn to.
Thus, Vancouver has a shortage of homes for sale. In the existing seller’s market, some buyers bid wild sums for existing property, putting upward pressure on prices.
It so happens the buyers from abroad happen to have a relatively uniform ethnicity, at least at the top end of the market, prompting talk about racism against Chinese people. This is a diversion.
People here aren’t worried by Chinese buyers; locals worry about being priced out of their own community by foreign money.
This worry is not unfounded. It has been the case for years now, people with average incomes are hard-pressed to afford local housing.
The evidence has gone beyond the anecdotal. Real estate companies freely acknowledge that the top end of the market is dominated by foreign buyers. To a lesser but still significant extent, the mid-range of the market also is affected.
That this affordability crisis has gone unaddressed reflects the fact that an overheated market serves the interests of the real estate industry, loving those commissions, and government, raking in property-related tax revenues.
Runaway pricing also works in favour of owners with home equity. It is regrettable that fetters are needed on what, ideally, should be a free and open property market. But with housing out of reach for too many in the region, it is time for government intervention.
The gap between sale prices of new condos and those for single-family homes could be closing as more buyers pay ever-climbing prices for condominiums in Greater Vancouver.
So far this year, there have been more than 2,000 new condo sales than at the same point last year, a 20-per-cent increase, according to Michael Ferreira, managing principal of Vancouver-based Urban Analytics, who addressed the Urban Development Institute last week. The figure totals two-thirds more sales than in 2013, he said.
Looking ahead, Ferreira said 87 per cent of the 21,600-plus concrete condo units scheduled to be finished by the end of 2018 have already sold.
The Real Estate Board of Greater Vancouver said Tuesday sales of apartments reached 1,543 in October 2015, an increase of 21.7 per cent compared to the 1,268 sales in October 2014, and an increase of 40.5 per cent compared to the 1,098 sales in October 2013. The benchmark price of an apartment property increased 11.4 per cent from October 2014 to $425,800.
Ferreira told the UDI that condo sales in some areas are increasing more than others and, across the board, rising construction and land costs are becoming large factors.
He said mainland Chinese buyers have been more active than in past years because the Chinese currency has increased by 30 per cent relative to the Canadian dollar.
This has also spurred companies with offshore capital from mainland China to buy land for building multi-family developments such as condos.
Some are well-established developers looking to set up here. These are “well-capitalized, patient and reasonably sophisticated,” said Ferreira.
He said they are attracted to and willing to overpay current market value for large or prime sites as a way of getting a foothold. The other breed is more of a mom-and-pop investor, whose “first priority is to park cash here.”
Aside from the “immense amount of offshore capital,” Ferreira said the “perfect storm” also includes more active local buyers.
At the soon-to-be-built Burrard Place, 350 of 395 units sold within a month. Priced at over $1,200 a square foot, these are nearing the cost of a single-family home in Vancouver. About half of the units, mostly those under $1 million, were sold to investors and the remaining, at about $2 million, to end users, according to Jon Stovell, president and CEO of Reliance Properties.
Older downsizers with money to spend on new condos after cashing out of their single-family homes are also a factor. In West Vancouver, apartments account for only about 19 per cent of all properties, said Michael Ward, senior vice-president of Grosvenor America. He is building and selling Grosvenor Ambleside in West Vancouver, where penthouse units are priced at between $3,500 to $4,000 a square foot and other units range from $3.5 million to $15 million. It’s about 70-per-cent sold, with more than 85 per cent to purchasers who live within 10 kilometres, said Ward.
“It’s not what we expected,” he said. “There are wealthy local people to absorb these condos, a mix of locals in West Vancouver with Caucasian, Iranian and Chinese buyers, who are equity rich in their homes.”
All of this has led to prices for prime Vancouver real estate — defined as properties in the top five per cent of the housing market — to increase by 20.4 per cent between September 2014 and September 2015, far outstripping Sydney, the city with the second largest price increase at 10.7 per cent for the same period, according to a report released Tuesday by London-based real estate consultants Knight Frank.
“Supply is tight with the number of homes for sale down 32 per cent year-on-year, and local demand is strengthening alongside foreign interest. The big question mark surrounds not Greece and the eurozone, but the slowdown in the Chinese economy. Wealth from China will continue to flow into overseas property markets with the U.K., U.S., Canada and Australia being key target destinations,” wrote researcher Kate Everett-Allen.