The BC Real Estate Discussion Thread

[Harvey Spector]

55 minutes ago, canucklehead44 said:

Yikes what a mess real estate is right now! I bought a pre-construction two-bedroom at Bosa RiverSky Tower 1 in New West and ended up moving to Toronto. I got it at a pretty good time (April 2015) and the prices seemed to jump up almost immediately after. 

I am a bit torn in regards to what to do. I actually want to stay in Toronto permanently (which I didn't anticipate), but the housing market has gone insane here too (but you can still get a detached house in the 600K-700K range). 

My options are to just move back when it is ready, sell it now via re-assignment, wait until it is built and sell it then, or keep it and rent it out while taking out a secure line of credit (at least I have a place if I do decide to come back to VanCity). 

Any advice? I know a hockey forum probably isn't the appropriate place, but just thought I would throw it out there as there may be others in a similar situation. 

 

New Westminster is booming. I've sold a lot of properties in New West the last couple of years. Just keep it as a rental and rent it out. Rental rates are quite strong in New West and Bosa is one of the best builders in the City. And my cousin works for Bosa and is the lead Project Manager for that site so you are in good hands!!

[Harvey Spector]

5 hours ago, taxi said:

 

No one should be buying a home at the very limit of their financing. If you cannot afford a potential 2% increase over current rates, you shouldn't be buying in the first place. 

Rates are currently at all time lows and are likely to increase by 2%. A lot of the people qualifying for these mortgages by the skin of their teeth are likely to be looking at 2-3 years mortgages, which have typically lower rates. When they go to renew and find that the interest rates have gone up 2% in 2 years, they are then F-ed. 

 

Also, the current real estate market is not a free market. A free market only exists when all people are competing in the same market. If you have foreign money coming in and not paying our taxes or conforming to our laws when they earn the money, that destroys the market. So yes, we absolutely need continuous government intervention to restore our current housing market to anything that resembles a "free market". The only issue is that this intervention did not come soon enough.

 

Current prices in no way reflect the housing market that would exists for Canadian citizens without foreign intervention. The market is also not set up to avoid the certain increase in interest rates. Lowering prices is a good thing for everybody. Safeguarding against defaults is a good thing for everybody.

 

If the government wants to intervene and try to purposely tank this market then I think it is going to backfire on them big time. We could go into severe recession and take years to recover. I don't think that should be our outcome. 

 

Yes the government and the banks should have done things years ago to fix the affordability issue but they waited too long because the Ponzi Scheme allowed them to rake in billions of dollars in profit.  And now they are going full steam ahead and throwing everything but the kitchen sink at this market to make it tank on purpose. I see a major recession coming at us in the next 12-18 months. And it won't be pretty. In fact it may get real ugly. 

 

As for first time home buyers they should be the last people the government goes after. They are the last ones who will ever default and walk away from their homes. They are the future of our country. They should be allowed to buy a home and not have the cards stacked against them simply because the government screwed up and waited too long to fix this mess. It's not about affordability for them in terms of the stricter qualifications it's a matter of the ratios being too high for the banks to consider. Whether your debt service ratio is 30% or 40% it doesn't matter. The payment remains the same regardless. And first time buyers usually lock in for 5 years or longer so it shouldn't affect them even if rates go up 2%. Now if they want to wait to buy thinking prices will drop that's fine but if they want a place now the government shouldn't make it any more difficult for our millenials to buy a home. 

 

I can understand going after the big fish, the money launderers, foreign buyers, people cheating the system and not paying taxes. But I think it is dead wrong and overkill to go after the hard working young families and rewrite legislation and make it much more difficult for these people to enter the market and buy a condo or a starter home. 

Edited October 5, 2016 by Harvey Spector

[canucklehead44]

1 hour ago, Harvey Spector said:

 

New Westminster is booming. I've sold a lot of properties in New West the last couple of years. Just keep it as a rental and rent it out. Rental rates are quite strong in New West and Bosa is one of the best builders in the City. And my cousin works for Bosa and is the lead Project Manager for that site so you are in good hands!!

Awesome that is good to hear! With the proximity to the Sky Train I figured it would be an easy spot to rent out. Thanks for the advice! 

[Realtor Rod]

It was September over August from REBGV "While the average price of a single-family detached home rose 29 per cent to $1.58 million, sales fell 9.5 per cent in September from August"

[Harvey Spector]

3 hours ago, Realtor Rod said:

It was September over August from REBGV "While the average price of a single-family detached home rose 29 per cent to $1.58 million, sales fell 9.5 per cent in September from August"

 

Where do you see the price going up 29% from last month?  The average price of a detached home went up $50,000 from last month, but is down $206,000, or 12% from July.  July $1,734,644, August $1,478,292, September $1,528,763...

[Wilbur]

13 hours ago, Harvey Spector said:

 

That 33% is year over year from last September. From July 2016 to today prices have flatlined if you use the REBGV MLS Home Price Index and they have actually dropped over 10% on the detached home side in that same time period if you use the Median price. 

To me, it's the bolded part that really matters.  The volume of sales means less as there could be other factors (fewer places on the market?) that could drop the number of sales but demand could still remain the same or even increase over that time.

[sameer666]

14 hours ago, Harvey Spector said:

 

If the government wants to intervene and try to purposely tank this market then I think it is going to backfire on them big time. We could go into severe recession and take years to recover. I don't think that should be our outcome. 

 

Yes the government and the banks should have done things years ago to fix the affordability issue but they waited too long because the Ponzi Scheme allowed them to rake in billions of dollars in profit.  And now they are going full steam ahead and throwing everything but the kitchen sink at this market to make it tank on purpose. I see a major recession coming at us in the next 12-18 months. And it won't be pretty. In fact it may get real ugly. 

 

As for first time home buyers they should be the last people the government goes after. They are the last ones who will ever default and walk away from their homes. They are the future of our country. They should be allowed to buy a home and not have the cards stacked against them simply because the government screwed up and waited too long to fix this mess. It's not about affordability for them in terms of the stricter qualifications it's a matter of the ratios being too high for the banks to consider. Whether your debt service ratio is 30% or 40% it doesn't matter. The payment remains the same regardless. And first time buyers usually lock in for 5 years or longer so it shouldn't affect them even if rates go up 2%. Now if they want to wait to buy thinking prices will drop that's fine but if they want a place now the government shouldn't make it any more difficult for our millenials to buy a home. 

 

I can understand going after the big fish, the money launderers, foreign buyers, people cheating the system and not paying taxes. But I think it is dead wrong and overkill to go after the hard working young families and rewrite legislation and make it much more difficult for these people to enter the market and buy a condo or a starter home. 

 

I'm actually going to half disagree with you on this. I think stronger regulation was way overdue as young people are completely over leveraging themselves in this market. Like the person you responded to said, if people can't handle a 2% interest rate rise, they really shouldn't be getting into a property. Those adjustable rate mortgages were one of the factors which led to the US housing crisis.

 

My beef with the new regulation is how it stopped at insured mortgages, which largely is affecting millenials, young families, etc. They should of brought down the hammer across the board. They should have added similar debt servicing requirements to all mortgages, not just insured ones. Moreover, they should of limited what lenders could do with rental income to qualify mortgages, as some of these policies are quite loose. They could of also gone after banks and their non-resident program requirements as well, as right now it is easier to get a mortgage for a non-resident than a resident. Any non-resident can put 35% down, have a small net worth requirement equivalent to 24 months mortgage + property tax + heat payments with no debt servicing requirements and no credit check requirements(even though there is an international credit check available). 

 

I don't have a problem with the government intervening and slightly changing things with the goal of softening the market 10-15%. That is obviously a very difficult tango to pull off as it would be easy to accidentally over correct, so it would have to be done with a steady hand and precision.

[Harvey Spector]

16 minutes ago, sameer666 said:

 

I'm actually going to half disagree with you on this. I think stronger regulation was way overdue as young people are completely over leveraging themselves in this market. Like the person you responded to said, if people can't handle a 2% interest rate rise, they really shouldn't be getting into a property. Those adjustable rate mortgages were one of the factors which led to the US housing crisis.

 

My beef with the new regulation is how it stopped at insured mortgages, which largely is affecting millenials, young families, etc. They should of brought down the hammer across the board. They should have added similar debt servicing requirements to all mortgages, not just insured ones. Moreover, they should of limited what lenders could do with rental income to qualify mortgages, as some of these policies are quite loose. They could of also gone after banks and their non-resident program requirements as well, as right now it is easier to get a mortgage for a non-resident than a resident. Any non-resident can put 35% down, have a small net worth requirement equivalent to 24 months mortgage + property tax + heat payments with no debt servicing requirements and no credit check requirements(even though there is an international credit check available). 

 

I don't have a problem with the government intervening and slightly changing things with the goal of softening the market 10-15%. That is obviously a very difficult tango to pull off as it would be easy to accidentally over correct, so it would have to be done with a steady hand and precision.

 

I agree with you but the problem is the government has no clue what scenario will happen. They are just throwing stuff out there to see what sticks and hope there is a correction. For all they know the market could tank 50%.  Nobody knows. 

 

Yes make rules to tighten foreign buyer qualification, use a more stricter process for evaluating rental income. All of that stuff is a no brainer and should already be happening. But I disagree on the millenials. A 2% interest rate hike will not put them below water, these are people with smaller mortgages than the rest, it's mostly on the condo side, and these are people who will never default, people who's income will double or even triple over the next 10 years. I never had a first time buyer or young millenial default on a mortgage in over 15 years in the business. It just doesn't happen. 

[Realtor Rod]

9 hours ago, Harvey Spector said:

 

Where do you see the price going up 29% from last month?  The average price of a detached home went up $50,000 from last month, but is down $206,000, or 12% from July.  July $1,734,644, August $1,478,292, September $1,528,763...

The information was from the board, you obviously didnt select the same info they did.

[sameer666]

1 hour ago, Harvey Spector said:

 

I agree with you but the problem is the government has no clue what scenario will happen. They are just throwing stuff out there to see what sticks and hope there is a correction. For all they know the market could tank 50%.  Nobody knows. 

 

Yes make rules to tighten foreign buyer qualification, use a more stricter process for evaluating rental income. All of that stuff is a no brainer and should already be happening. But I disagree on the millenials. A 2% interest rate hike will not put them below water, these are people with smaller mortgages than the rest, it's mostly on the condo side, and these are people who will never default, people who's income will double or even triple over the next 10 years. I never had a first time buyer or young millenial default on a mortgage in over 15 years in the business. It just doesn't happen. 

Yes, but the prices have only been really ridiculous for a couple years now, and the interest rates have been low the entire time.

 

As someone who directly underwrites these mortgages, I can say millenials are definitely stretching themselves quite thin. Maybe they aren't in a position to default, but they are increasingly putting themselves in positions where they are house poor, and when interest rates do start going up it will only further stretch them more.

 

Regarding changes in legislation and how they affect the market, I really wish they would consult more with our industries when making these changes, as both the 15% foreign tax and these new changes on mortgage regulation are quite frankly horrible. The only thing they got correct is closing the capital gains loophole.

Edited October 5, 2016 by sameer666

[The Vancouver Connection]

Can anyone here give me some sales figures on Condo's sold in North Van. Specifically, Condo's sold in the hamilton area - looking at comps for 733 west 3rd (The Shore) project. 

 

Thanks.

[Harvey Spector]

23 hours ago, The Vancouver Connection said:

Can anyone here give me some sales figures on Condo's sold in North Van. Specifically, Condo's sold in the hamilton area - looking at comps for 733 west 3rd (The Shore) project. 

 

Thanks.

 

Sold listings and prices in Hamilton area since August 1st:

 

319 723 W 3RD STREET   $363,000 1 bed 507sf yr built 2016

410 317 BEWICKE AVENUE   $375,000  1 bed 542 sf yr built 2014

519 723 W 3RD STREET    $380,000 1 bed 508sf yr built 2016

204 935 W 16TH STREET    $535,000 2 bed 783sf yr built 2009

313 733 W 14TH STREET    $585,000 2 bed 823sf yr built 2014

502 733 W 3RD STREET   $605,000 2 bed 869sf yr bult 2015

408 1621 HAMILTON AVENUE   $985,000 2 bed 1426sf  yr built 2015

Edited October 6, 2016 by Harvey Spector

[Harvey Spector]

REBGV sales for September 2016 compared to sales from September 2015:

 

Detached Homes:

 

Vancouver West - decrease 46%

West Vancouver - decrease 66%

Richmond - decrease 64%

North Van - decrease 47%

Burnaby - decrease 30%

Coquitlam - decrease 42%

Surrey - decrease 58%

 

Attached Homes (Townhouses and Condos):

 

Vancouver West - decrease 28%

West Vancouver - decrease 43%

Richmond - decrease 22%

North Van - decrease 7%

Burnaby - decrease 24%

Coquitlam - decrease 22%

Surrey - increase 19%

 

[Lancaster]

3 minutes ago, Harvey Spector said:

REBGV sales for September 2016 compared to sales from September 2015:

 

Detached Homes:

 

Vancouver West - decrease 46%

West Vancouver - decrease 66%

Richmond - decrease 64%

North Van - decrease 47%

Burnaby - decrease 30%

Coquitlam - decrease 42%

Surrey - decrease 58%

 

Attached Homes (Townhouses and Condos):

 

Vancouver West - decrease 28%

West Vancouver - decrease 43%

Richmond - decrease 22%

North Van - decrease 7%

Burnaby - decrease 24%

Coquitlam - decrease 22%

Surrey - increase 19%

 

 

Does the number include pre-sales?

 

I heard that the pre-sale market has remained steady as the non-resident tax doesn't apply to pre-sales units.

[Harvey Spector]

REBGV sales to active listing ratios for September 2016 (below 12% buyer's market, 12%-20% balanced market, above 20% seller's market):

 

Detached Homes:

 

Vancouver West - 9.4%

West Vancouver - 5.3%

Richmond - 10%

North Van - 17%

Burnaby - 13%

Coquitlam - 18%

Surrey - 13%

 

Attached Homes (Townhouses and Condos):

 

Vancouver West - 37%

West Vancouver - 30%

Richmond - 31%

North Van - 63%

Burnaby - 43%

Coquitlam - 43%

Surrey - 35%

 

We are still in a seller's market with condos and townhouses.  With detached homes, we are in a balanced market in North Van, Burnaby, Coquitlam and Surrey and we are in a buyer's market in the Vancouver West, West Vancouver and Richmond areas.

Edited October 6, 2016 by Harvey Spector

[Harvey Spector]

12 minutes ago, Lancaster said:

 

Does the number include pre-sales?

 

I heard that the pre-sale market has remained steady as the non-resident tax doesn't apply to pre-sales units.

 

No these numbers do not include pre-sales as they are not recorded in the REBGV mothly stats.  Pre-sales are still very strong so far this year.  Most developers are selling out within a couple weeks of launch.  Bosa sold their Cardero project in Coal Harbour in a week at an average of $1,750 per foot.

Edited October 6, 2016 by Harvey Spector

[Harvey Spector]

REBGV median prices for September 2016 compared to median prices from August 2016:

 

Detached Homes:

 

Vancouver West - decrease 19% to $2,990,000

West Vancouver - decrease 3% to $2,680,000

Richmond - no change $1,669,000

North Van - decrease 0.5% to $1,542,500

Burnaby - increase 2% to $1,550,000

Coquitlam - no change $1,100,000

Surrey - decrease 2% to $832,000

 

Attached Homes (Townhouses and Condos):

 

Vancouver West - decrease 3% to $631,000

West Vancouver - decrease 23.5% to $689,000

Richmond - no change $463,000

North Van - increase 18% to $587,000

Burnaby - increase 3.5% to $466,000

Coquitlam - decrease 1% to $403,500

Surrey - no change $400,000

 

So it looks like Vancouver West has taken a big hit on prices in September for detached homes.  Burnaby prices have actually gone up slightly.  Everywhere else was pretty flat.

 

For condos and townhouses, again Vancouver West took a big hit in September, while North Van saw a large increase in prices.  Everywhere else was pretty flat.

 

Moving forward with the new government imposed mortgage rules and stress tests, specifically for first time home buyers and millenials, I envision the condo and townhouse prices to fall as well over the next 3-6 months.  It will be interesting to see how this new government legislation affects the market moving forward.

Edited October 6, 2016 by Harvey Spector

[The Vancouver Connection]

6 hours ago, Harvey Spector said:

 

Sold listings and prices in Hamilton area since August 1st:

 

319 723 W 3RD STREET   $363,000 1 bed 507sf yr built 2016

410 317 BEWICKE AVENUE   $375,000  1 bed 542 sf yr built 2014

519 723 W 3RD STREET    $380,000 1 bed 508sf yr built 2016

204 935 W 16TH STREET    $535,000 2 bed 783sf yr built 2009

313 733 W 14TH STREET    $585,000 2 bed 823sf yr built 2014

502 733 W 3RD STREET   $605,000 2 bed 869sf yr bult 2015

408 1621 HAMILTON AVENUE   $985,000 2 bed 1426sf  yr built 2015

Thanks man!

[Harvey Spector]

I forgot to include Vancouver East stats...

 

REBGV sales for September 2016 compared to sales for September 2015:

 

Detached homes:

 

Vancouver East - decrease 6%

 

Attached homes (condos & townhouses):

 

Vancouver East - decrease 5%

 

Sales to active listings ratio for September:

 

Detached homes:

 

Vancouver East - 10%

 

Attached homes (condos & townhouses):

 

Vancouver East - 58%

 

Median prices for September 2016 compared to August 2016:

 

Detached homes:

 

Vancouver East - increase 5% to $1,534,000

 

Attached homes (condos & townhouses):

 

Vancouver East - decrease 1% to $475,000

[Harvey Spector]

End of Canada’s ‘unique’ mortgage system means higher bank costs

The days when Canada’s banks could offload much of the risk of underwriting mortgages onto taxpayers may be drawing to a close.

Canadian Finance Minister Bill Morneau disclosed plans Monday to begin consultations on sharing the risk of mortgage default with the country’s lenders. The move was part of a package of measures designed to stabilize the housing market after years of soaring prices in Vancouver and Toronto.

Related

• Toronto home prices soar 20%, but market now faces impact of new mortgage rules
• Ottawa's move to tighten mortgage market will squeeze some home buyers out

While it’s not clear what form that risk-sharing will take — a deductible on mortgage insurance may be one option — any move will likely require Canadian banks to boost capital levels and result in higher mortgage rates, according to analysts. The banks’ industry group, which includes Royal Bank of Canada and Toronto-Dominion Bank, is already fighting back.

“This could have profound impacts on the insured mortgage funding market and the equity market’s perception of credit risk in the banking sector,” Jason Bilodeau, an analyst with Macquarie Capital Markets, said in an Oct. 4 note to clients.

One reason Canada’s banking industry has been cited as one of the world’s most stable is that the government backs all the mortgage insurance obligations in the market. That includes fully-backing mortgage insurance sold by Canada Mortgage & Housing Corp. and 90 per cent when sold by private insurers like Genworth MI Canada Inc. that compete with the government agency. This iron-clad government support on insured mortgages is “unique” in the world, according to the finance department.

More than half of Canada’s $1.4 trillion home loan market is made up of insured mortgages, according to figures from the Bank of Canada and finance department. Home owners are required to take out insurance if their down payment is less than 20 per cent of the house value, though banks often buy so-called portfolio insurance even when the down payment exceeds that level.

As household debt levels swelled amid housing booms in Vancouver and Toronto, groups including the Organization of Economic Co-operation and Development, CMHC and the even the department of finance have called for lower risks to taxpayers.

A switch to risk-sharing “would require mortgage lenders to manage a portion of loan losses on insured mortgages that default, rather than transferring virtually all the risk onto the taxpayer via the government guarantee for mortgage insurers,” Morneau told reporters Monday in Toronto.

Risk sharing could disrupt mortgage lenders’ funding strategy on securitized funding programs such as the National Housing Act Mortgage Backed Securities and Canada Mortgage Bonds as well as unsecured funding, National Bank Financial analyst Peter Routledge said Monday in a note.

“Ultimately, any form of risk sharing will put upwards pressure on mortgage rates as lenders will need to set aside higher levels of capital for NHA MBS and CMB funding and/or the cost of that capital is adjusted upward to reflect a potentially higher-risk balance sheet,” Routledge said.

Risk sharing may reduce lenders’ ability to fund their balance sheet in a low-cost and efficient fashion and crimp their efforts to sell pooled mortgages for securitization, he said.

Canada Mortgage & Housing, the country’s federal housing agency that provides insurance for home loans and oversees mortgage securitization programs, welcomed tougher housing market regulations.

“We expect the government to approach any such risk-sharing model in a very gradual manner”

“Lenders have, as I’ve said in the past, no skin in the game, and therefore the incentives are misaligned with good risk management,” President Evan Siddall said Tuesday during a CMHC conference in Ottawa.

Such risk sharing changes could hurt Canada’s housing finance system, according to the Canadian Bankers Association, which represents the nation’s industry.

“The introduction of lender risk sharing through a deductible on mortgage insurance would represent a significant structural change to the current housing finance system,” the association said in a Monday statement. “We have concerns that it could have negative side effects on a housing finance system that has worked smoothly, simply and efficiently and served Canada’s economy well.”

Mortgage lenders such as Equitable Group Inc., Home Capital Group Inc., First National, MCAN Mortgage Corp., and Street Capital Group Inc. will have more difficulty than Canada’s six-biggest banks in absorbing the associated costs because they have less earnings diversity, Routledge said.

Mortgage stocks tumbled in Toronto Tuesday in response to the measures. Genworth MI Canada Inc., Canada’s biggest private mortgage insurer, fell 10 per cent to $30.64 and alternative lenders such as First National Financial Corp. also dropped. The eight-company S&P/TSX Commercial Banks Index was down 0.4 per cent.

“We expect the government to approach any such risk-sharing model in a very gradual manner,” Routledge said. “The need to avoid unintended negative consequences remains paramount for Canadian banks and mortgage companies, which rely on a well-functioning, government-backed MBS market.”

While the government backs 100 per cent of the mortgage insurance obligations of CMHC, it also supports private insurers — Genworth and Canada Guaranty Mortgage Insurance Co. — subject to a deductible equal to 10 per cent of the loan.

Bloomberg News