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Average rental rates nationally for all property types declined for the second consecutive month, but are still up 9.4% annually. Surprisingly, the increase in rents is supported by some of the smaller municipalities such as London, Hamilton, Kanata, Burlington, and Kitchener, which are all experiencing double-digit rent growth when considering all property types.




National Overview

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When comparing the change in rent monthly, quarterly or annually, it is important to understand if the composition of the sample of transactions is changing. A way to look at rent that controls for changes in the size of properties is to look at the rent per-square-foot (psf).


The average rent per-square-foot nationally for all property types has increased by 8.4% annually from $2.14 psf in November 2018 to $2.32 psf. However, the average rent per-square-foot has been fairly flat since July.


It must be kept in mind, landlords and property owners do not list (or know) the unit size for every property on Rentals.ca, and these figures represent a smaller sample size in comparison to the total listings, which is more heavily weighted with Ontario and British Columbia urban markets, where every square foot counts, and there are more new units where the unit size is known.


To add another caveat, landlords with very small units may not list the unit size even though they know it, because they it might prevent prospective tenants from calling or viewing the suite. This is important because the smallest units typically have the highest rent per-square-foot outside of penthouses and units with expansive balconies.

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The 8%-9% rent increase over the past year is not consistent across built forms and bedroom types. The chart below looks at the average rent by bedroom type for all properties listed on Rentals.ca in November. The data shows two-bedroom units have experienced the highest annual growth at 17%, followed by one-bedroom and five-bedroom units at 11%, and three-bedroom units at 10%.

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According to survey data from Statistics Canada, 27% of people who moved over the past five years did so to move to a larger or more high-quality dwelling. Tenants want more space, and two bedrooms have always been a very desirable suite among renters. In November, two-bedroom units made up 37.9% of listings on Rentals.ca, just edging out one-bedroom units at 37.8%.


Across the country, two-bedroom units from 900 sf to 1,100 sf have been popular and experiencing strong rent growth nationally.


The chart below looks at the average rent by rounded unit size for all property types in Canada in November 2019, with the last 12 monthly readings shown via the faded markers (square footage is rounded to the nearest hundredth).

The highest annual appreciation in rents is occurring for units from 1,600 sf to 1,900 sf, with the higher point in that range being units rounded to 1,900 sf, which are up 19% annually. The second grouping experiencing the high growth is units from 900 sf to 1,100 sf, which are up between 8% and 15%. The slowest annual growth is occurring in the 2,000 sf to 2,200 sf range (the sample size is small) and in the 1,200 sf to 1,500 sf range.

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Single-family homes (single-detached and semi-detached) experienced the highest annual price growth among property types in Canada at 10.3%, rising from $2,286 per month in November 2018 to $2,522 per month in November 2019.


Townhouses increased by 9.1% annually, rental apartments grew by 8.2% annually, while condominium apartments lagged with growth of just 2.6%. Basement apartments declined year-over-year, but the sample size is small, and the results are not likely an indication of a big drop in demand for this property type.

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Provincial Rental Rates

On a provincial level, Ontario had the highest rental rates in November, with landlords seeking $2,339 per month on average (all property types), up from $2,334 in October, and 9.1% annually from $2,144 in November of 2018.

In Saskatchewan, the average monthly rent declined 9.7% annually, while average rents in Alberta are down 3%.

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Municipal Rental Rates

The majority of listings on Rentals.ca are rental and condominium apartments, and the chart below looks at the average rent and the annual change in average rent for a select number of Canadian municipalities (and former municipalities prior to amalgamation) in November 2019.


As was the case in October, Hamilton and Scarborough led the pack with year-over-year rent growth of 25% and 23%, respectively for apartments with rental or condo tenure.


Two of the more affordable Canadian rental markets, Quebec City and Winnipeg, have both experienced a significant jump in rent year-over-year, increasing by 22% and 21%, respectively.


On the other extreme are the municipalities in Alberta and Saskatchewan, with Red Deer, Calgary, Regina, Saskatoon, Edmonton and Fort McMurray all seeing average rents for apartments decline from November 2018 to November 2019. The declines range from 1% to 7% annually.

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2020 Forecasts

Vancouver


The chart below looks at the average rent for all property types in Vancouver from October 2018 to November 2019, and the Rentals.ca and Bullpen Consulting forecast for 2020.


In November of 2018, the average rental rate was $2,353 for all property types listed on Rentals.ca. That rate increased to $2,507 for November 2019, an increase of 6.5% annually. Overall in 2019, the average rent in Vancouver was $2,351 per month (through 11 months).


The forecast calls for average rent in 2020 overall to be $2,423, with December 2020 rent at $2,585 per month, a 3% annual increase (3.1% from November 2019). This forecast is a moderation from the 7% annual growth forecasted by Rentals.ca and Bullpen last year.


New rental apartment completions are expected to rise in Vancouver in 2020, coupled with relatively flat resale market conditions, should result in less rent inflation.

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Calgary


The chart below looks at the average rent for all property types in Calgary from October 2018 to November 2019, and the Rentals.ca and Bullpen Consulting forecast for 2020.


In November of 2018, the average rental rate was $1,457 for all property types listed on Rentals.ca, that rate decreased to $1,381 by November 2019, a decrease of 5.2% year-over-year. Overall in 2019, the average rent in Calgary was $1,450 per month.


The forecast calls for average rent in 2020 overall to be $1,405, with December 2020 rent at $1,370 per month, a 1% annual decline. This forecast is a moderation from the 4% annual growth forecasted by Rentals.ca and Bullpen last year, which clearly put excess weight on some of the positive economic data at this time last year.

A continued slump in the energy sector should continue to keep rents flat in 2020.

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Edmonton


The chart below looks at the average rent for all property types in Edmonton from October 2018 to November 2019, and the Rentals.ca and Bullpen Consulting forecast for 2020.


The average rental rate was $1,223 for all property types listed on Rentals.ca in November 2018, that rate decreased to $1,175 for November 2019, a drop of 3.9% annually. Overall in 2019, the average rent in Edmonton was $1,257 per month.


The forecast calls for average rent in 2020 overall to be $1,207 for all property types, with December 2020 rent at $1,165 per month, a 1% annual decline. This forecast is similar to the zero growth forecasted for Edmonton by Rentals.ca and Bullpen in 2018. The forecast of 0% rent change was on track in the first half over the year, but rents slumped in the second half of 2019. Like Calgary, the continued uncertainties in oil-related industries should continue to keep rents flat in 2020.10 EdM D.png


Toronto


The chart below looks at the average rent for all property types in the former City of Toronto (pre-amalgamation) from October 2018 to November 2019, and the Rentals.ca and Bullpen Consulting forecast for 2020.


In November of 2018, the average rental rate was $2,385 for all property types listed on Rentals.ca, that rate increased to $2,591 for November 2019, an increase of 8.6% annually. Overall in 2019, the average rent in Toronto was $2,504 per month.


The linear forecast calls for average rent in 2020 to surpass $2,800, but Rentals.ca and Bullpen expect December 2020 rent to be $2,770 per month, a 7% annual increase. This forecast is a moderation from the 11% annual growth forecasted by Rentals.ca and Bullpen last year, which was a little too bullish, as condo rental rates have moderated more than expected (+4%), despite the more pronounced increase in rental rates for purpose-built apartments (+9%) and single-family homes (+11%).


Based on strong pre-construction condominium apartment sales from 2016, the level of condo apartment completions is expected to rise rapidly in 2020 based on this typical 4-year sales to occupancy lag. However, elevated population growth, and a recovering resale housing market will continue to price-out first-time buyers and should offset some of that increases condo rental supply.

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Mississauga


The chart below looks at the average rent for all property types in Mississauga from October 2018 to November 2019, and the Rentals.ca and Bullpen Consulting forecast for 2020.


In November of 2018, the average rental rate was $2,232 for all property types listed on Rentals.ca in Mississauga, that rate increased to $2,405 for November 2019, an increase of 10.2% annually. Overall in 2019, the average rent was $2,504 per month.


The linear forecast calls for average rent in 2020 to surpass $2,600, but Rentals.ca and Bullpen forecast that December 2020 rent will be $2,585 per month on average, an 8% annual increase. This forecast is a slight moderation from the correct 10% annual growth forecasted from December 2018.


Mississauga will continue to move in parallel with the former City of Toronto with prospective renters fleeing Toronto for less expensive units or larger properties.

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Ottawa


The chart below looks at the average rent for all property types in Ottawa from October 2018 to November 2019, and the Rentals.ca and Bullpen Consulting forecast for 2020.


In November of 2018, the average rental rate was $2,029 for all property types listed on Rentals.ca. That rate decreased to $2,018 for November 2019, a decline of 0.5% annually. Overall in 2019, the average rent in Ottawa was $2,032 per month. The decline for all property types is in contrast to the annual increase of 9% for condos and rental apartments presented earlier. The changing composition of listings contributes to some of these data anomalies, which can occur despite a robust sample of listings.


The forecast calls for average rent in 2020 overall to be $2,042 with December 2020 rent at $2,100 per month, a 4% annual increase. This forecast is a moderation from the 9% annual growth forecasted by Rentals.ca and Bullpen last year, which was accurate for condo and rental apartments, but a big miss for the rental market overall.


The resale ownership housing market in Ottawa has really started to pick up, and that should have the impact of pulling up rental rates as first-time buyers are priced out.

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Montreal


The chart below looks at the average rent for all property types in Montreal from October 2018 to November 2019, and the Rentals.ca and Bullpen Consulting forecast for 2020.


In November of 2018, the average rental rate was $1,412 for all property types listed on Rentals.ca. That rate increased to $1,618 for November 2019, an increase of 24.4% annually. The sample size of listing in Montreal is large, so the rent spike and monthly volatility wouldn’t typically be expected, but is an illustration of the wide variety of rental product in Montreal and that suites are getting snapped up quickly, and not lingering on Rentals.ca for months without being leased. Overall in 2019, the average rent in Montreal was $1,472 per month.


The forecast calls for average rent in 2020 of $1,583, but Rentals.ca and Bullpen expect December 2020 rent to be $1,695 per month, a 5% annual increase. Given the volatility in the monthly figures, there is a wide forecast band, but rent is expected to grow at twice the rate of inflation.

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A static luxury real estate market begs the question, how can we increase an overall sense of urgency in today’s luxury buyers? Real estate market trends are showing that most markets are currently leaning in the buyer’s favor, and as a result, listings are sitting a bit longer on the market than usual.


When there are too many luxury listings available, buyers tend to feel like they have more time to mull over their options and take their time making an offer.


As a luxury real estate agent, this can become a great source of frustration both for you and the sellers you’re representing. However, adapting to real estate trends in the luxury market means being able to see past the things you can’t control and leveraging the things that you can. 

USE YOUR SOLD, UNDER CONTRACT, AND PENDING LISTINGS TO MOTIVATE BUYERS TO TAKE ACTION

You can’t force buyers to be more decisive, but you can certainly motivate them by showing them that other buyers are taking action. This is called creating “social proof”, and it’s becoming more and more necessary to adapt to today’s real estate market trends. 


Most agent websites focus heavily on their available listings, but giving just as much air time to listings that are under contract, pending, or just sold is a direct, yet non-aggressive way to show buyers that they aren’t the only ones interested in what you have to offer. 


Similarly, posting about these unavailable listings on social media can help create a sense of forward motion in the market for prospects who are just passively following your accounts. When they see a property they were interested in is now “under contract”, it sends the message that they need to take a more active approach to their home search. When agents do this, it not only helps them, but it helps the entire local market. 

TODAY’S LUXURY BUYERS ARE RESPONDING TO INFLUENCER MARKETING

With the rise of social media also came the rise of all types of consumers seeking third-party influencers’ opinions on what to buy.


People are being sold something everywhere: on their television, their radio, and now on their social media feeds. They’re aware that whoever is doing the selling is likely going to say that whatever they’re offering is the best, whether it really is or not, which is what makes influencer marketing so appealing.


Influencer marketing entails having an unbiased, third-party person or entity of influence who already has an established audience within your target market endorsing whatever it is you’re trying to sell, whether it’s something as small as a book or as big as a luxury property. 


Using established community influencers is another way to create social proof around your listings. This lets potential buyers know that people they trust— or who are at least not going to significantly profit from whatever it is you’re promoting— are interested in what you’re selling. 


While this is a big topic with lots of conditions to consider to apply it correctly to luxury real estate, one example would be to consider that health and wellness are major priorities for most of today’s affluent buyers.


With this in mind, reaching out to yoga instructors or wellness coaches with a large social media following to host a yoga class or private wellness workshop at one of your available listings that happens to have an incredible view, a meditation room, or spa-like space,  would be a great way to create buzz within the community about your listing.


Although influencer marketing might not work for all of your listings, it’s something to consider when you’re running out of ways to build momentum.

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The British Columbia Real Estate Association (BCREA) reports that a total of 8,221 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in May, a decline of 7 per cent from the same month last year. The average MLS® residential price in the province was $707,829, a decline of 4.3 per cent from May 2018. Total sales dollar volume was $5.8 billion, an 11 per cent decline from the same month last year.


“BC home sales increased 9 per cent in May compared to April, on a seasonally adjusted basis,” said BCREA Chief Economist Cameron Muir. “However, consumers continue to struggle with the negative shock to affordability that stringent mortgage lending policies have created.”


Total MLS® residential active listings were up 23.2 per cent to 41,519 units compared to the same month last year. However, total active listings were down 2 per cent from April, on a seasonally adjusted basis, the first monthly decline since the B20 Stress test was introduced in January 2018.


Year-to-date, BC residential sales dollar volume was down 25.1 per cent to $19.8 billion, compared with the same period in 2018. Residential unit sales decreased 20.2 per cent to 28,711 units, while the average MLS® residential price was down 6.2 per cent to $688,339.

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Millennials make up the largest cohort of today’s home-buying population. As Canadians find themselves in the throes of another busy spring housing market, many sellers are taking an age-specific approach to marketing their listing to this younger demographic. This is especially relevant in Vancouver – one of Canada’s hottest and most competitive real estate markets.


Millennials dominate the first-time buyer group in Vancouver, favouring the condominium market. This generation is tech-savvy and environmentally conscious, and both factors play a huge role in their decision-making process. It is important to keep this information in mind when showcasing listings to a prospective client.


So, what are Millennials in Vancouver looking for in a home?


Green, energy-efficient homesWell-designed, energy-efficient homes are crucial for a generation that cares about the climate crisis and their ecological footprint. Good insulation, efficient lighting and updated plumbing systems are important features that affect how large a house’s footprint is. For environmentally conscious buyers, it is important to demonstrate the long-term value of a home both in terms of energy savings and a reduced footprint.


Smart, connected homes: Smart home technology is growing with this buyer cohort. The ability to control the lights, home security upgrades and smart thermostats should all be integrated into a property.


Entertaining spaces: Today’s home buyers are looking for open and usable spaces to host friends and family. Open floor plans and functional outdoor spaces are key selling points – a view of Vancouver’s waterfront is a bonus!


The neighbourhood: When it comes to buying a home, it’s important to look beyond the property itself and think about the neighbourhood. According to the RE/MAX 2018 Spring Market Trends Report, Millennials prefer to live closer to work and have access to green spaces and parks. These are the factors they consider beyond the price of a home.


With more Millennials entering Vancouver’s real estate market, whether it’s a starter home or investment property, it’s important to keep the key features they’re looking for top of mind. Thankfully, Vancouver is a very liveable, so these features won’t be hard to come across in a house hunt!

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Metro Vancouver home sales decline below historical averages in 2018

Metro Vancouver home sales in 2018 were the lowest annual total in the region since 2000.


The Real Estate Board of Greater Vancouver (REBGV) reports that sales of detached, attached and apartment properties reached 24,619 on the Multiple Listing Service® (MLS®) in 2018, a 31.6 per cent decrease from the 35,993 sales recorded in 2017, and a 38.4 per cent decrease compared to the 39,943 residential sales in 2016.


Last year’s sales total was 25 per cent below the region’s 10-year sales average.


“This past year has been a transition period for the Metro Vancouver housing market away from the sellers’ market conditions we experienced in previous years,” Phil Moore, REBGV president said. “High home prices, rising interest rates and new mortgage requirements and taxes all contributed to the market conditions we saw in 2018.”


Home listings in Metro Vancouver reached 53,614 in 2018. This is a 1.9 per cent decrease compared to 54,655 homes listed in 2017 and a 6.9 per cent decrease compared to the 57,596 homes listed in 2016.


“The supply of homes for sale will be an important indicator to follow in 2019. We’ve had record building activity in recent years and many projects will complete soon. This will provide additional housing options for home buyers across the region,” Moore said.


The MLS® HPI composite benchmark price for all residential homes in Metro Vancouver ends the year at $1,032,400. This is a 2.7 per cent decrease compared to December 2017.


“As the total supply of homes for sale began to accumulate in the spring, we began to see downward pressure on prices across all home types throughout the latter half of the year,” Moore said.


The benchmark price of detached homes in the region declined 7.8 per cent over the last 12 months and 7.3 per cent since June 2018. Apartment homes increased 0.6 per cent over the last 12 months and have declined 6.4 per cent since June 2018. The benchmark price for townhomes in Metro Vancouver have increased 1.3 per cent since December 2017 and have decreased 5.3 per cent over the last six months.

December summary

REBGV reports that residential home sales in the region totalled 1,072 in December 2018, a 46.8 per cent decrease from the 2,016 sales recorded in December 2017, and a 33.3 per cent decrease from November 2018 when 1,608 homes sold.


Last month’s sales were 43.3 per cent below the 10-year December sales average.


There were 1,407 detached, attached and apartment homes newly listed for sale on the MLS® in Metro Vancouver in December 2018. This represents a 25.6 per cent decrease compared to the 1,891 homes listed in December 2017 and a 59.3 per cent decrease compared to November 2018 when 3,461 homes were listed.


The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 10,275, a 47.7 per cent increase compared to December 2017 (6,958) and a 16.5 per cent decrease compared to November 2018 (12,307).


For all property types, the sales-to-active listings ratio for December 2018 is 10.4 per cent. By property type, the ratio is 7.1 per cent for detached homes, 12 per cent for townhomes, and 14.2 per cent for apartments.


Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.


Sales of detached homes in December 2018 reached 348, a 43.6 per cent decrease from the 617 detached sales recorded in December 2017. The benchmark price for a detached home is $1,479,000. This represents a 7.8 per cent decrease from December 2017 and a 1.4 per cent decrease compared to November 2018.


Sales of apartment homes reached 535 in December 2018, a 34 per cent decrease compared to the 1,028 sales in December 2017. The benchmark price of an apartment home is $664,100. This represents a 0.6 per cent increase from December 2017 and a 0.6 per cent decrease compared to November 2018.


Attached home sales in December 2018 totalled 189, a 49.1 per cent decrease compared to the 371 sales in December 2017. The benchmark price of an attached home is $809,700. This represents a 1.3 per cent increase from December 2017 and a 1.1 per cent decrease compared to November 2018.

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R

 

Real estate prices in the Vancouver region have gone up too much too quickly, creating conditions ripe for sharp declines, the author of a report on the country’s most expensive real estate market says.

 

“Prices have accelerated sharply, especially at the beginning of 2016, and many more people were priced out of the market,” Marc Pinsonneault, senior economist at National Bank of Canada, said in an interview. “Prices were overshooting.”

 

The Teranet-National Bank House Price Index, which tracks overall change in price for various housing types, last month reached a record 249.53 (which means prices have climbed almost 150 per cent since June, 2005) in the region, but could fall 10 per cent over a 12-month period, Mr. Pinsonneault said. For all housing types, that would bring the broad index back to where it was in April.

 

Within that index, the value of detached houses could tumble 20 per cent over a 12-month period, likely to begin in late 2016, Mr. Pinsonneault estimates. For detached houses, it roughly translates into values that could retreat to levels last seen in October, 2015.

 

Sales of detached houses, condos and townhouses have been falling in the region since peaking at a record high in March of this year.

 

Several measures have combined to dampen sales activity, including the B.C. government’s new luxury tax on properties in the province that sell for more than $2-million. That tax took effect in February.

 

The provincial government also implemented a 15-per-cent tax on foreign home buyers in the Vancouver region, effective Aug. 2, although it is unclear how much of the sales decrease since is due to the tax. Another factor to consider is the impact of the federal government’s decision to tighten mortgage lending rules effective Oct. 17.

 

The Teranet-National Bank House Price Index for the Vancouver region has gained 24 per cent over the past year, despite the recent sales slowdown.

 

The index shows pricing trends based on a large sample of the sales of properties registered at the land titles office.

 

“The index prices are different than average prices,” Mr. Pinsonneault said. The real estate industry’s benchmark prices, which represent the sale of typical properties, remain strong. The benchmark price for detached homes sold last month in Greater Vancouver hit a record $1.58-million – 33.7 per cent higher than in September, 2015.

 

But with fewer high-end properties selling, that has dragged down the average price for detached houses sold in Greater Vancouver, compared with the spring. Last month, the price for detached houses sold in the region averaged $1.53-million, down 15.7 per cent from April, according to the Real Estate Board of Greater Vancouver.

 

By contrast, the Teranet-National Bank House Price Index has continued to roar ahead in the region this year. “The reason the sharp drop in sales has yet to translate into [an index] price decline is that the resale market remained tight despite the drop in sales,” Mr. Pinsonneault wrote.

 

He said it is unclear whether a significant number of foreign buyers are shifting their attention to the Greater Toronto Area.

 

“China’s anti-corruption campaign is suspected of crimping the flow of capital from that country,” he said in his report, which notes that both the Vancouver and Toronto metropolitan markets are at risk of experiencing price declines in 2017.

 

The GTA faces a 3-per-cent overall drop its home price index next year, especially with condos expected to be plentiful in supply, Mr. Pinsonneault said. He believes the anticipated price decrease for detached houses in the GTA will likely be in line with his overall forecast.

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For some the last few weeks was a rush to wrap up real estate deals before Aug. 2 tax was imposed on Metro Vancouver property deals.

For some the last few weeks was a rush to wrap up real estate deals before Aug. 2 tax was imposed on Metro Vancouver property deals. (DeWitt Clinto/Flickr)

Deals collapsing under the weight of extra costs from 15% tax which came as a 'shock'

By Yvette Brend

 
Real estate deals are collapsing in B.C. for buyers and sellers who missed the deadline to be exempt from the recently created 15 per cent foreign-buyer aimed tax.
 

Realtors estimate that 3,000-4,000 deals are in limbo, as they had not closed before the tax came into effect Aug. 2.

It's not clear yet how many deals have collapsed, but Fraser Valley realtors in North Delta, Surrey, White Rock, Langley, Abbotsford and Mission B.C. say foreign investors are indeed backing out of agreements because of the tax.

 

"It is unfortunate that, in the wake of the most complex and volatile market we've seen, our government has chosen a path that, at this time, will bring significant distress to consumers both local and abroad rather than nuanced solutions," said Charles Wiebe, president of the Fraser Valley Real Estate Board.

Vancouver real estate

Realtors are reporting collapsing deals in the wake of the new B.C. real estate tax. (Christer Waara/CBC)

Last week thousands of Metro Vancouver buyers and sellers rushed to meet the midnight deadline to be exempt from the real estate tax.

 

Many reacted in "disbelief" at the sudden change in price on pre-struck deals.

"It's so fast. Just everyone is shocked," said Jin Luo, a realtor with Remax.

 

After the legal documents flutter to the floor industry watchers warn there will be challenges to the new tax, seen by many as unfair.

Vancouver city at night

Deals are already falling through according to realtors who blame the new 15% tax that was applied even to real estate transactions brokered before the new tax existed. (Tina Lovegreen/CBC)

Some say it violates the North American Free Trade Agreement (NAFTA) which prohibits governments from imposing policies that punish foreigners. Top lawyers say the tax is ripe for a constitutional challenge.

The foreign buyer tax, aimed at cooling Vancouver's torrid housing market, was announced July 25. The aim was to chill speculative investing and preserve affordable homes for people living and working in Canada.

'It's going to affect everyone'

Buyers and sellers were caught in the sting of the Aug. 2 tax that has been applied even to deals struck long before it existed.

"We weren't given notice .... so most likely the deals will collapse. It's not fair for everyone," added Luo. 

Johnathan Cooper

"The ripple effect [of this tax] is going to affect many, many Canadian families," said Jonathan Cooper of vice president at Macdonald Real Estate Group. (Charlie Cho/CBC)

He hopes the August market slowdown is just summer doldrums, but worries about the tax.

"It's going to affect everyone .. builders, electricians, plumbers."

Cost of tax

On a half-million dollar deal the tax represents $80,000 to $90,000, said Jonathan Cooper, vice president at Macdonald Real Estate Group in an interview with CBC's The Early Edition.

"Fifteen per cent is substantial," said Cooper. "It's been a hectic week."

While he has not seen the tax collapse a deal yet — as the buyer would then lose a deposit and potentially face a lawsuit — he has seen a huge impact.

For sale sign in Vancouver BC

It's unclear how the new foreign-buyer-aimed tax will affect the market in the long term. Some experts predict it won't slow high-end sales much. (Christer Waara/CBC)

He described an immigrating family who recently bought a home on Bowen Island for $750,000 in time for their daughter to attend UBC, only to face an extra $100,000 to pay.

"It was a burden for them. This isn't the kind of family that has an extra $100 thousand dollars just lying around," he said.

Long-time Canadian home owners hurt by tax

Cooper said he dealt with dozens of cases like this — mid-range buyers frustrated by the lack of warning before the tax was imposed and the B.C. Government's decision not to grandfather deals struck long before the Aug. 2 tax deadline.

The sudden change in final prices jeopardized deals and hurts everybody connected to the real estate deal said Cooper, who described the "shock and disbelief" of a retired Canadian couple who were trying to sell their family home.

The additional tax left their buyers scrambling to come up with $300,000 they did not have.

'Shaken his confidence in Canada'

"The ripple effect [of this tax] is going to affect many, many Canadian families who are not supposed to be the targets of this taxation," he said.

But for Cooper and others the tax aimed at foreign buyers is much more damaging.

Critics are calling for the 15 per cent levy to be challenged under the free trade agreement and in court on the basis of discrimination.

For Cooper, whose own extended family immigrated from Malaysia — via the Philippines — it's personal.

Tax photo

Anybody who is not a Canadian citizen of a permanent resident will now be charged 15 per cent extra tax on real estate transactions. (Dave Dugdale/Flickr)

"They are coming here for the same reasons we come here. For education. For clean air. the same reasons that we love living here," said Cooper, describing the emotional cost of the tax aimed at one buyer because of his country of origin.

"The [buyer] told me that this has shaken his confidence in Canada as a place to invest and a place to raise his family," said Cooper.

With files from Meera Bains and Greg Rasmussen

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home prices

Mark your calendar, because a major bank has set a date for Vancouver and Toronto real estate to cool off, if only a little bit.

 

TD Economics issued its quarterly economic forecast on Thursday, and it has some promising news for anyone who hopes to see housing simmer down in those cities in the near future.

 

The bank said the twin factors of affordability and higher borrowing costs could lead to a "cooling in domestic and foreign housing demand."

 

But it added that any slowdown is unlikely to happen until next year, unless governments introduce new regulatory measures to bar property speculation in 2016.

 

TD also said that, even with a slowdown, "There tends to be a lag before weaker resale demand translates into a moderation in building activity."

 

Nevertheless, "the party will come to an end," TD said.

toronto condos


TD chief economist Beata Caranci said that home prices such as those that have been seen in Vancouver are usually "followed by a period where prices cool," The Globe and Mail reported.

 

B.C. prices could fall as much as two to four per cent next year, she noted.

 

"Given the high levels, this is pretty small and will maintain elevated levels," Caranci said, adding Ontario could also become a "sideways market" next year due to "affordability erosion."

 

vancouver condos
Condos in Vancouver. (Photo: Christian Kober/Getty Images)


The housing analysis came as part of a report that predicts Canada's economy will grow by 1.3 per cent this year.

 

That's down from growth of 2.4 per cent in the first quarter alone. It has largely been attributed to slackening economic activity from the end of the quarter, and a slowdown in oil production due to the Fort McMurray wildfire.

 

Canada's economy could "rebound" to two per cent next year, TD said.

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Prime Minister Justin Trudeau is scheduled to meet with a round table of experts on Vancouver’s housing affordability crisis on Friday, just as new data are released showing the extreme nature of the city’s escalating housing problem.

 

Planner and analyst Andy Yan, who will attend the meeting, has released a comprehensive set of maps that show the rapid rise of assessed house prices over the past decade. Strikingly, his data show prices have spiked considerably within the past two years.

 

At least one academic at the gathering plans to make the case that Vancouver’s sudden escalation of house prices is timed perfectly with the mass exodus money from China. None of the academics interviewed was given any specifics as to what would be on the agenda, other than a general discussion of housing, so they plan to bring their wish list of recommendations to the table.

 

Josh Gordon, an assistant professor in public policy at Simon Fraser University, said in an interview on Thursday that he plans to make the case that the inflow of Chinese money has pushed Vancouver home prices out of range for the average person.

 

For example, in 2013, online real estate portal Juwai facilitated $5-billion (U.S.) worth of global real estate deals for its Chinese clients. In 2014, that number soared to $52-billion.

 

Prof. Gordon argued that that corresponds with a major increase in the number of houses assessed at more than $1-million (Canadian) in Vancouver.

 

The number of houses priced below $1-million dropped from 41 per cent in assessment year 2014 to 9 per cent by 2016, according to Mr. Yan’s data. Prior to the exodus of Chinese money, assessment figures show the market was levelling off. “Then all of a sudden it explodes,” Prof. Gordon said. “It shows so clearly what is going on is being driven by that kind of a factor. And we do have pretty good data on flows of capital out of China.”

 

The province announced in its February budget that it will begin gathering data on foreign investment in British Columbia’s real estate market, requiring all new purchases to list the buyer’s nationality. However, Finance Minister Mike de Jong has played down the idea that the role of foreign buyers in Vancouver’s affordability crisis is significant.

 

But Prof. Gordon said there is also solid data on the flow of Chinese money into Australia, where house prices have also soared. He questioned why Vancouver would be any different.

 

“We are a very similar target – if not a more enticing target – because we have such low property taxes, and we make such limited effort to track the nature of money and enforce money-laundering rules.”

 

Mr. Gordon said he also planned to make it clear to the Prime Minister that the high-end market is not operating in isolation to the rest of the market. It’s a common argument put forward by the real estate industry that foreign wealth is only driving luxury property prices.

 

Mr. Yan’s maps clearly illustrate the ripple effect spreading from the more affluent west side of the city to the east. The average price for a detached house that sold in the city of Vancouver is $2.96-million, according to recent figures supplied by Landcor. That’s a 19.8-per-cent increase since January. The average price of a condo is $719,434, a 7.88-per-cent increase in the same period. Throughout the region, prices have risen 20 to 35 per cent over all in the last year.

 

“The point I want to make in the public debate is that a lot of the other things we are seeing right now – including speculation, fear of missing out, loans from the bank of Mom and Dad, all these different things that we are talking about in terms of driving prices – these are all in a sense knock-on effects of foreign money,” Prof. Gordon said.

“They are not independent causal factors; they are occurring as a result and in reaction to the foreign money that is flowing into the city.”

 

Mr. Yan said he will emphasize with participants that they need to look at demand. “Clearly ,global capital is part of this,” said the acting director of Simon Fraser’s City Program. With these patterns, we have price and the supply, but we need to look at demand. And in terms of housing, we need to ask, ‘What are the kinds of demand we want to support? And what are the behaviours we want to discourage?”

 

University of British Columbia geography professor David Ley, who’s studied Asian global capital flows for 16 years, said he will suggest to Mr. Trudeau that Ottawa attempt to cool off the top end by taxing it, which would quell the entire market. He said he will also suggest a tax on foreign property purchases. “It would be a bolder move, and I think there’s quite an appetite for that. But that would be a bigger ask, and a complicated ask, as you can’t always easily tell what is a foreign purchase.”

 

He said he’ll also ask for regulation of the real estate sector, including measures against money laundering. Indebtedness tied to high mortgages is another one of Mr. Ley’s concerns he’d like to discuss with the Prime Minister.

 

“I’m going to raise the issue that we need to protect what we already have – the housing from the ’70s and ’80s, such as the government-subsidized rentals, whose subsidies are expiring and, not surprisingly, are in need of repair. I think it’s an easier task to conserve what you already have,” he said.

 

Jean-Yves Duclos, the minister responsible for housing, will follow up the Prime Minister’s round table with more in-depth meetings on June 26 and 27, according to his communications director, Mathieu Filion.

 

Vancouver and Toronto prices have also recently caused the Bank of Canada and major banks some concern. Bank of Canada Governor Stephen Poloz and economists have recently cautioned consumers that rising prices are unsustainable.

 

“It’s incredible, really,” Prof. Gordon said. “We’re numb to it now, but if you think about how much income you need to have a $1-million house, you realize how crazy things are.”

 

Prof. Gordon said he plans to tell Mr. Trudeau that there is no time to waste and that immediate action needs to be taken.

 

“They need to start cracking down on money laundering, which is within their jurisdiction, and they need to end the Quebec Immigration Investor program, and seriously look at taxation of foreign investors.”

 

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