Will the value of detached homes in Vancouver increase under new City initiative?

Tuesday, June 26th, 2012

Vancouver’s new housing affordability initiative may have the effect of increasing the value of single detached homes, while providing a moderating influence on prices for condos and townhomes, according to Tsur Somerville, director, Centre for Urban Economics and Real Estate, Sauder School of Business at the University of B.C.

“If this is successful, I’d expect higher single family prices than they’d be otherwise,” said Somerville Monday of the plan, which will see the city become more involved in the housing development business.

Somerville said there are already pressures to convert single family homes into denser types of housing, and that those pressures should increase under the plan.

The city’s housing initiative, he said, proposes reducing development costs and red tape to augment denser housing projects, which would result in “more applications to rezone existing single family sites along major arterials.

“You’ll redevelop more single family [land] into condos, which increases [single family] land prices and reduces the supply of single-family homes. There’d be fewer single-family homes, so they’d be worth more.”

However, Somerville believes the policy might also have a moderating effect on overall prices for townhomes and condos in Vancouver, because the supply of high-density housing would increase as average rents drop. “If rents fall, the rental value is lower for an investor, so they’ll pay lower prices. And if we build more condos and townhomes, there will be more supply and prices will moderate.”

However, the chief economist for the B.C. Real Estate Association believes the new housing policy won’t have much of an effect on overall home values in Vancouver.

“It will help increase the stock of affordable housing for lower income households,” said Cameron Muir, noting that high-density housing tends to be less expensive. “But [for overall price levels in the city] I would expect that it would be negligible.”

Source: Brian Morton, Vancouver Sun

Condo construction is booming in Vancouver

Tuesday, June 26th, 2012

Vancouver is building on its reputation as a city of glass and steel.

Look around the skyline and you’ll see it dotted by cranes, and everywhere there seems to be another hole in the ground making way for another apartment building.

Sixteen condo towers are under construction, according to a database by Skyscraperpage.com and another 67 proposed high-rises are in the works.

Amid newly-tightened mortgage rules and concerns of an over-supply in the Toronto condo market that prompted financial authorities including Bank of Canada governor Mark Carney to sound an alarm this week, we think we’ve earned the right to ask: Is Vancouver oversaturated with condos?

Housing starts in Vancouver are up in the first five months of 2012 compared to the same period last year, driven largely by multiple-unit dwelling construction – which is up by about 50 per cent from last year.

According to the Canada Mortgage and Housing Corporation, 5,503 condo units are under construction in Vancouver in April, adding to the existing 230,000 units already in the city.

B.C. Real Estate Board economist Cameron Muir says the short answer to our question is no.

“Prices have been pretty flat since 2009,” Muir said. “There’s ample supply in the market place, but we are seeing prices at a steady pace.”

The fact more condos than single-detached homes are being built in Greater Vancouver is nothing new, said Muir, as condo starts have consistently made up about 75 per cent of all housing starts in the last several years. “It’s a function of land supply.”

Consumer demand during the last several months is trending on a 10 to 15 year average, he added.

One indicator, says Muir, of the demand-and-supply balance in the marketplace is the sales-to-new-listings ratio.

In Vancouver last month, the ratio, at 15.3 per cent, inched closer to a buyer’s market — but sits within the balanced range of between 15 to 20 per cent.

There hasn’t been a sustained buyer’s market since the recession hit, between late 2008 to early 2009.

As of April, 504 recently-completed units remain unsold. Overall, 3,017 units are listed on MLS.

Is Vancouver over-supplied with condos? The market will let us know.

Here are some of the condos currently under construction in Vancouver:

1. Wall Centre False Creek I, II, III, IV

100 W. 1st Avenue

• 556 units in four towers

• Completion: Early to mid-2014

2. Maynards

1901 Wylie Street

• 253 units

• Completion: Fall 2012

3. James Living

289 W. 2nd Avenue

• 155 units

• Completion: August 2012

4. The Mark

1372 Seymour Street (at Pacific Boulevard)

• 300 units

• At 41 storeys, it is billed as the tallest tower in Yaletown

• Completion: Summer 2013

5. Salt

1308 Hornby Street

• 199 units

• Completion: June 2014

6. Cosmo

161 W. Georgia Street

• 253 units

• Status: Move-in ready

7. The Rolston

1300 Granville Street (site of the old Cecil Hotel)

• 187 units

• Completion: June 2013

8. Maddox

1304 Howe Street

• 214 units

• Completion: December 2013

9. Uptown

2788 Prince Edward

• 100 units

• Completion: Fall 2012

10. TELUS Garden

775 Richards Street

• 428 units in a 53-storey tower, which will be the second-tallest in the city after the Shangri-La

• Completion: 2015

11. Marine Gateway

8400 Cambie Street

• 415 units in two towers

• Completion: 2015

12. 1153 West Georgia Formerly the Ritz Carlton

• 290 units (but should be confirmed independently, based on CBC report)

• Completion: XXX

13. Wall Centre Central Park Boundary Road and Vanness Avenue

1,114 units in three towers

Status: Rezoning application approved. Completion date: XX

TOTAL: 4,464

Here are some proposed developments:

1. Rize Mount Pleasant

Kingsway and Broadway

241 units

Status: Rezoning proposal approved by city council in April. If approved, completion date of XX.

2. Burrard Gateway

1290 Burrard Street (and 1281 Hornby Street)

About 589 units in two towers

Status: Proposed, awaiting rezoning approval. If approved, completion date of 2015 to 2016

Source: GlobalNews. A division of Shaw Media Inc., 2012

Right place right price – Metro Vancouver condo developments sell out

Wednesday, April 18th, 2012

Concrete condo sales are heating up in Metro Vancouver, but only for the right projects in the right location – near rapid transit.

That’s the word from Jeff Hancock, a senior manager with real estate market firm MPC Intelligence, who said presales of concrete condos in the right location and at the right price point continue to escalate with Asian investors largely driving the market.

“It’s not market-wide,” he said. “It’s more spotty. If you are 10 out of 10, you’ll do well. That means a great location, welldesigned, priced appropriately and definitely [served] by transit. Other projects are having to struggle a bit.”

Hancock said an MPC forecast earlier this year that 8,000 new units in concrete towers would be launched in the first six months of 2012 has been down-graded to about 7,800.

He said about 3,800 new concrete condominiums across 19 projects have started presales since Jan. 1 and that 60 to 65 per cent have been sold, “an impressive metric.”

Hancock cited last month’s sellout of 415 homes at Marine Gateway and the Telus Garden’s 428 condos as examples of strong sales in the sector. Two other condo towers in Burnaby – Silver by Intracorp and The Met by Concord Pacific – also sold extremely well in presales over the past two weeks, he added.

Hancock noted that the market has been driven by Asian investment segments, most for long-term investments but also for family use. “End user groups have also been active, specifically in North Vancouver, New Westminster, Burnaby North and downtown Vancouver.”

He said the resale market for concrete condos has not been as strong as the market for new units, possibly because investors buying a presale unit like the idea of having a year or two to complete the purchase.

Cameron Muir, chief economist for the B.C. Real Estate Association, characterized overall condo sales in Metro Vancouver as “moderate,” with no significant change in activity over last year and little pressure on prices.

He said some areas are under-supplied, while some areas, like Langley and Surrey, have a significant amount of inventory.

“In certain areas, particularly close to downtown, the inventory has been drawn down. And condo projects well located to transit are doing well to date.

“But that’s the exception rather than the rule. We’re still facing headwinds due to the overall economy.”

Source: Brian Morton, Vancouver Sun

Chinese investors still attracted to Vancouver and Toronto’s housing markets

Wednesday, February 29th, 2012

If you thought Chinese investors were starting to lose interest in Canadian real estate, think again.

According to a new report, both Vancouver and Toronto are forecast to be this year’s most popular destinations for Chinese overseas property investment.

“Buying sentiment for overseas properties among Chinese mainland investors has been gaining strong momentum over the past few years,” said Derek Lai, director of international properties for Colliers International real estate services and the author of the report. “To date, about 20% to 40% of the foreign property investors in these destinations are from the Chinese mainland.”

The report goes on to cite Vancouver’s Chinese population – what it pegs as 30% of city residents – as one of the driving factors for that investment choice.

Mainland Chinese investors are also lured by the Lower Mainland’s educational opportunities and proximity to home, according to Colliers.

Still, Canada’s two largest cities are facing some competition for Chinese investment, with London and Singapore rounding out the top four real estate destinations.

In the UK, rising property values and a very limited supply have accelerated the push into London, with Chinese investors now buying as much as 20% of all new builds.

Singapore’s low mortgage rates of 1.2% to 2%, relatively high and stable rental yields of around 5% and a transparent transaction system are responsible for attracting its share of mainland Chinese interest, according to the Colliers report relying on both interviews and investment declaration states.

In Canada, Vancouver’s appeal helped to drive up price gains in large parts of the Lower Mainland last year, with domestic investors concerned another year of strong transaction growth could present a real challenge to their own acquisition plans if sellers continue to hold out for well-heeled foriegn buyers. Many have only begun to lower their asking prices to meet the current market realities; ie, more supply than demand.

That said, there has been some movement.

The dollar value B.C. properties sold in January dipped 7.6% to $2.1 billion, compared to the same month last year. The average MLS residential price was 3.8% lower at $527,219 compared to January 2011.

Source: Vernon Clement Jones, Canadian Real Estate Wealth

Canada’s condo and housing market – what could happen if things start to cool too quickly

Tuesday, February 21st, 2012

An interesting and informative video from BNN about the state of Canada’s condo and housing market and how much taxpayers could be on the hook if the market starts to cool faster than expected.

video: The state of Canada's condo market

video: The state of Canada's condo market

When surveyed, most Vancouver condo owners would prefer a house

Tuesday, May 10th, 2011

Most Vancouverites who recently purchased or plan to buy a condo say they’d prefer a house if they had more money.

That’s the finding of the TD Canada Trust Condo Poll, which found that 64 per cent of Vancouverites, versus 46 per cent of Canadians, cited affordability of condos is a big attraction.

That was also true for respondents nationally under 35, with 62 per cent liking the affordability of condos, versus 46 per cent of other age groups.

According to the poll, which was released Tuesday, Vancouverites were also more likely than those surveyed in other cities to consider buying a condo with a friend to make it more affordable.

However, condos are also more likely to be seen by Vancouver residents as a stepping stone, with many planning to move up to a house in the future.

According to the survey, half of Vancouver respondents expect to live in their condo for three years or less (18 per cent) or four to six years (32 per cent).

Nationally, 22 per cent of those under 35 said they don’t plan to spend more than three years in a condo, while 45 per cent plan to move after four to six years.

However, it was a different story with those over 50, who say condos fit into their plans to downsize their home. As well, 31 per cent of those over 50 nationally said they don’t plan to move again from their condo and 53 per cent plan to spend more than $10,000 on upgrades (compared to just 15 per cent under 35).

“Moving to a smaller, less expensive home can free up money to allow pre-retirees to make some upgrades and enjoy a bit more luxury in their space,” Barry Rathburn, TD Canada Trust’s manager, residential mortgages, said in a statement.

“It’s especially important for those who are selling their home to downsize as part of their retirement strategy to make a budget for any upgrades and stick to it.”

The poll found that 98 per cent of Vancouver residents named good building security as the most important feature to look for in a condominium.

As well, 96 per cent said low condo fees was the second most popular feature, with 84 per cent saying they would not pay more than $400 a month n condo fees.

Energy efficient buildings also ranked high.

The online survey of 806 people in Vancouver, Calgary, Toronto and Montreal was conducted from March 25 to April 11 by Environics Research Group.

Respondents had either bought a condo in the past 24 months, intend to buy a condo in the next 24 months, or considered a condo when shopping for a home.

Source: Brian Morton, Vancouver Sun

Canadian condos are a popular real estate purchase

Wednesday, November 24th, 2010

Condominiums have become a hot sector of the Canadian real estate market, particularly as an option for first-time home buyers spooked by high prices for single-family homes, says a report released Monday.

Real estate services firm RE/MAX says affordability, lifestyle, investment opportunities and urban renewal efforts are among the reasons condo sales have spiked over the last year in some Canadian markets.

“As one of few affordable housing options available to first-time buyers, the concept is poised for dramatic growth in years to come,” Michael Polzler, executive vice-president for RE/MAX’s Ontario-Atlantic Canada operations, said in a statement.

RE/MAX said condo sales in the Greater Toronto Area are up 10.4 per cent, year-to-date, as of September, and now represent one out of every three homes sold there. In Ottawa, condo sales are up 11.9 per cent.

“The lifestyle has also gained a foothold with younger, hipper audiences as the definition of home ownership evolves with the changing demographic,” Polzler added. “Dreams of the small home with a white picket fence are being replaced by the funky loft apartment in proximity to shops, restaurants and entertainment.”

Price comparisons provided by RE/MAX for Ottawa showed the average price for condominiums had risen 12.9 per cent to $252,641 over the last year, but was still more than $100,000 cheaper than the average price of $366,587 for a single-family home.

While the RE/MAX report focused specifically on Ontario and Eastern Canada, Gregory Klump, chief economist for the Canadian Real Estate Association, said condo sales are becoming a bigger share of more expensive housing markets across the country, such as the Toronto and Vancouver real estate markets.

“(Condos) have been accounting for a greater percentage over time of all sales activity,” Klump said. “Condo units are an affordable alternative to single-detached home ownership.”

The RE/MAX report said other factors driving the condo market include urban redevelopment that favours intensification over urban sprawl, empty-nesters seeking low-maintenance retirement properties and investors hoping to sell when prices appreciate, the report said.

RE/MAX said the “vast majority” of newly built condominiums in Toronto are purchased by long-term investors from Asia and the Middle East, who will often rent them out until they find their desired sales price.

Read more: http://www.canada.com/business/Condominium+market+Canada+heating/3757559/story.html#ixzz16GysmzBG

Written by: Derek Abma, The Vancouver Sun (c)

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