Saturday, Dec 21, 2019
Volume 28 Number 51
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Baby boomers have made a fortune on real estate here are three reasons to consider cashing out now Beware the belief that real estate prices will continue to climb at anywhere near the rate we have seen over the past 20 years Long-time Canadian homeowners have benefited from declining interest rates and increasing home prices. As baby boomers, currently aged 55 to 75, continue to transition to retirement, they will be faced with decisions about whether to and when to downsize or sell their real estate. Many boomers would highlight their home as their best historic investment, better than RRSPs in some cases. This may be a failure of the retail mutual fund industry as much as it is a hat tip to home ownership. Real estate appreciation over the past 20 years in each of Canada’s largest three cities — Toronto, Montreal, and Vancouver — has outpaced that of New York, Los Angeles, and Seattle, according to data from Better Dwelling. The most recent Royal LePage Boomer Trends Survey found that only 41 per cent of boomers intend to downsize. There are plenty of reasons to sell your real estate in retirement, and I would like to highlight three that have arisen recently in my practice as case studies. Names have been changed to protect privacy. The Cottage Owners Carol and Ted are in their 60s and Carol is about to retire. She has a defined-benefit pension plan, and Ted has a RRSP he has contributed to diligently. He expects to work for a couple more years. They rent a condo in the city and own a valu-
able cottage on a lake. They enjoy their time at the cottage but acknowledge they will not use or keep the property forever. They feel like it has been a good investment and want to continue to benefit from further growth in the value. However, they still have a mortgage outstanding on it. In many cities across the country, young people are having a tough time affording homes, let alone second properties like cottages. Airbnb has also made it easier to find cottages to rent for a day, a week, or a month at a time. About 5,000 baby boomers retire each week according to Statistics Canada. As they age, many will be selling their cottages. As they die, their children will be inheriting those cottages. Will children of boomers maintain two properties, in some cases co-owning cottages with siblings, or sell those cottages to pay down their own home mortgages? My guess is much more of the latter than the former. I know there is only so much waterfront real estate to go around, but there are also only so many potential buyers to purchase the coming flood of vacation properties. My advice to Carol and Ted was to beware the belief that real estate prices will continue to climb at anywhere near the same rate we have seen over the past 20 years. Selling their cottage would allow them to pay off their mortgage, supplement their retirement savings, and simplify life as they transition to retirement.
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Assessed value of Lower Mainland homes to drop in 2020: BC Assessment The government agency that assesses the value of B.C. homes says many Lower Mainland owners can expect a lower valuation next year. BC Assessment previewed 2020 home value assessments Monday, and said Lower Mainland single-family home values could fall by five to 15 per cent next year, depending on location. Condos and townhouses in the region could see a drop of zero to 15 per cent, according to the agency. On Vancouver Island, the situation is less clear. Detached home values could drop as much as 10 per cent or climb by as much as 15 per cent, said BC Assessment. Condos and townhouses could swing by a drop of five per cent to an
increase of 15 per cent. In the Thompson Okanagan, BC Assessment says detached home values could drop by five per cent or climb by as much as 10 per cent. Condos and town-
homes could drop by as much as 10 per cent or climb by as much as 15 per cent, it said. Anticipated property assessment changes for B.C. in 2020. BC Assessment “Changes in property
assessments really depend on where you live,” said assessor Tina Ireland. “For example, assessed values of homes in many areas of Metro Vancouver will see a softening in value, while other
though increases have “stabilized” in the Lower Mainland. According to the agency, values in Vancouver and the inner suburbs including the North Shore, Richmond, Burnaby and Tri-Cities will see the biggest dip. It said detached homes are slated to drop 10 to 15 per cent in value, while condos and townhomes would drop by zero to 15 per cent. BC Assessment values, which are calculated based on assessments taken July 1 every year, are used to determine property markets and areas of taxes. the province will see The province will fiminimal change and nalize and release even modest increas- assessments on Jan. es over last year’s val- 2. Residential and commercial property ues.” Ireland said commer- owners can expect a cial properties around property assessment B.C. continue to trend notice in the mail next upward in value, month. GLOBAL NEWS
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Metro Vancouver real estate rebound levels off, prices hold flat in November After four months of rebounding sales activity, Metro Vancouver’s real estate market appears to be leveling off, according to new data from the Real Estate Board of Greater Vancouver (REBGV).
The organization released its November sales data Tuesday, which showed a 55.3 per cent jump in sales across the region from the same month last year. However, after four months of sales gains, the number of units sold declined 12.6 per cent from October. November’s sales were four per cent above the 10-year November average. Inventory on the region’s market also continued to thin out, with the number of active listings on the MLS system down 12.5 per cent year-over-year and down 12 per cent from October. The benchmark price of a detached home across the region was $1.415 million, down 5.8 per cent from November 2018 but up a slim 0.3 per cent from October.
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The benchmark price of a condo across the region was $651,500, down 3.8 per cent year-over-year and down 0.2 per cent from October 2019. Areas with the biggest year-over-year price drop for detached homes included Vancouver’s West Side (9.3 per cent), South Burnaby (7.8 per cent), Richmond (7.2 per cent) and West Vancouver (7.1 per cent). Only Whistler (4.5 per cent) and Squamish (3.6 per cent) saw price increases. Areas with the biggest year-over-year price drop for condos included West Vancouver (9.1 per cent), Tsawwassen (8.4 per cent), New Westminster (7.8 per cent), and South Burnaby (6.2 per cent). Only Whi“We started to see more homebuyer confidence in the summer and this trend continues today,� said REBGV president Ashley Smith in a media release. “It’ll be important to watch home listing levels over the next few months to see if supply can stay in line with homebuyer demand.� Recent reports from Central 1 Credit Union and the Canada Mortgage and Housing Corporation have suggested that after a nearly two-year slump, the region’s real estate market is set to level off and begin accelerating in 2020 and 2021. GLOBAL NEWS
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B.C. creates new Crown agency to regulate real estate industry The B.C. government has established a single Crown agency tasked with regulating the province’s real estate industry. The move merges the new BC Financial Services Authority (BCFSA) with the Office of the Superintendent of Real Estate (OSRE) and the Real Estate Council of B.C. (RECBC). The government of former premier Christy Clark ended self-regulation of the real estate industry in 2016, after an independent report into misconduct in the real estate industry and shady practices such as “shadow flipping.” The NDP government then launched a review of the
regulatory system in 2018. New real estate regulations better protect buyers and sellers That review, headed by former civil servant Dan Perrin, recommended creating a single office with responsibility for regulating the industry. The Expert Panel on Money Laundering’s May 2019 report echoed that recommendation. According to the Ministry of Finance, the BCFSA will now be tasked with real estate licensing, conduct, investigations and discipline. It says the new agency will streamline and modernize regulation, and better monitor the industry for
money laundering. The ministry says the RECBC and OSRE will be integrated within the new agency. The BCFSA was established on Nov. 1, and initially tasked with regulating mortgage brokers, private pension plans and financial institutions. It assumed the responsibilities of the Financial Institutions Commission (FICOM), which operated as a branch of the Ministry of Finance. The new agency is governed by a board of directors, appointed by the government of the day, and currently headed by CEO Blair Morrison.
B.C.’s skyrocketing real estate market will ‘correct’ in 2019: analyst Housing prices in Vancouver are set to rise just 0.6 per cent After years of skyrocketing real estate prices in much of urban B.C., things are finally set to cool off in the new year. A 2019 market survey forecast from Royal LePage suggests that house prices are in the Lower Mainland will rise by just 0.6 per cent. Last year’s forecast predicted prices would rise by five per cent. Next year’s predicted increase would leave houses costing an average of $1.3 million by the end of the year. READ MORE: Sales drop 41% in Fraser Valley real estate in November Royal LePage Sterling Realty general manager Randy Ryalls said that the slowdown
was a natural correction after a busy few years on the real estate market. “The volume is down off of those crazy levels where we were selling 5000 properties a month,” Ryalls said. “This is much more of a normalization of our market than we’ve seen in quite a few years.” Ryalls said that the mortgage stress test brought in at the start of the year, coupled with the foreign buyers tax and other provincial policies, was helping to calm markets. But for buyers who thought “the ship had sailed,” Ryalls said 2019 presented a new opportunity.
“The condo and townhouse market has sort of balanced itself out and detached houses are probably firmly in buyer market territory,” he said. That means there will be opportunities for first-time millennials buyers for the first time in years. “Where you were having to compete with several other buyers to buy a property in 2016 and 2017, now you have an opportunity to go and be the only buyer on a property and negotiate a pretty good price,” Ryalls said. “There’s an opportunity for a millennial buyer. Now they can go and not make a deci-
sion in five minutes when they walk in the door.” But recent buyers shouldn’t despair that they’ve bought a useless property. B.C. still has “probably the best economy in Canada,” Ryalls noted, and with unemployment remaining low, the real estate market continues to have a strong foundation. “There’s periods of a lot of growth in terms of prices and then it slips back a little bit,” Ryalls said. “We’ve gone through a period when we’ve had double digit increases per year and that’s not sustainable and that’s going to correct itself a little bit.”
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Commercial Real Estate: Investors looking for Vancouver hotel options The number of hotel rooms in the city has been on the decline, with 1,105 rooms eliminated between 2010 and 2018 due to conversions or closures. A lack of hotel rooms and solid demand from visitors for a place to sleep in Vancouver should be spurring developers to develop more hotels, say commercial property experts. Vancouver welcomed 10.67 million overnight visitors to the region in 2018, and is predicting an increase in 2019 of 2.8 per cent. Meanwhile, hotel occupancy in Vancouver is predicted to reach 81 per cent for 2019 — a rate that typically spurs hotel development in other major international cities. The growing number of visitors to Vancouver has more hoteliers, investors and developers eyeing the market for future investment, said Saravan Veylan, a partner at MLT Aikins LLP in Vancouver who specializes in corporate law in the tourism industry. “This city is in an extremely advantageous position to attract all the banner brands and boutique hoteliers,” he told Postmedia. “Even conservative capital is on the hunt for the right
project in Vancouver.” The number of hotel rooms in the city has been on the decline, with 1,105 rooms eliminated between 2010 and 2018 due to conversions or closures. Vancouver has lost more hotel rooms than it has gained in the last three years, confirmed David
Ferguson, director of valuation, advisory with CBRE brokerage house in Vancouver. (Moreover, the Four Seasons Hotel Vancouver is set to cease operations next month.) CBRE’s data shows that roughly 500 new rooms are being built or planned across various projects
within the City of Vancouver through 2022, but more are needed to keep pace with demand. “Shovels are not in the ground for some of these,” Ferguson told Postmedia. Meanwhile, CBRE has estimated that the revenue per available room in Vancouver is expected to increase
by up to eight per cent in 2019 as occupancy has climbed. “If you have a major urban market anywhere in the world that’s hitting 80-percent occupancy, you’re typically seeing new supply constructed,” Ferguson said. “There is still room for more rooms to get built, absolutely. The market can handle it from a capacity perspective.” There have been other challenges that have prevented substantial new hotel projects, including more perceived value in other types of real estate, he said. “The scarcity of land (and) the returns other assets have generated for development have led developers to look at office, or multi-family, or industrial as being more lucrative,” Ferguson said. Last year, the City of Vancouver updated its zoning bylaws for certain sections of the downtown core to protect existing hotels from redevelopment and to encourage residential developers to include ho-
tel components in their projects. Veylan said that update should help to create some new hotel rooms. “Rightly or wrongly, the city has developed a reputation for being somewhat slow to grant these approvals, but that’s not what we’re seeing after the policy changes that have been made,” he said. “The city has been working with developers and hoteliers pretty closely to get the right projects approved.” There remains plenty of demand and not enough rooms, which should be attractive to developers and hotel companies. “The lack of affordable hotel capacity to support the tourism industry is not only an issue for Vancouver,” Veylan said. “Since Vancouver is often a gateway for international travellers to the rest of the province, it has a ripple effect.” The city needs to be able to take advantage of solid tourism numbers, he said. “In order to do that, we still need more hotel capacity in this city quickly.”
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Real estate sales data now available online
A Fisherly.com map from Oct. 30 showing real estate sales in Vancouver. If you zoom in, more sales show up.
But there’s a catch, you have to go through a realtor who’s registered with fisherly.com. Not so long ago if you wanted to find out what properties were selling for you had to ask a realtor. “The realtors were the gatekeepers of data,” says Les Twarog, a realtor who owns the popular website BCCondos. net. No more. In March a new website, fisherly. com, started posting real estate sales in the Lower Mainland from the last two years. At Trump Tower at 1151 West Georgia St., for example, 16 condos have been sold between April 2017 and today — four in 2019, nine in 2018 and three in 2017. The last sale was Unit 3303, a one-bedroom with 649 square feet of space that went for $1,258,000 on Oct. 6. A two-bedroom, 1,192 sq. ft. condo sold for $2,950,000 on July 12, while another two-bedroom, 1,180 sq. ft. unit brought $1.65 million June 6. Evidently height matters. The two-bedroom that
sold for almost $3 million was on the 67th floor, while the $1.65-million condo was on the 25th. The fisherly.com listing even works out the price per square foot — $2,475 for Unit 6702, $1,398 for Unit 2507. The site lists houses as well. A three-bedroom rancher at 265 West Kings Rd. in North Vancouver sold for $1.362 million on Sept. 30. A couple of blocks away, a six-bedroom, 4,488 sq. ft. house sold for $2.5 million on Sept. 18. But there’s a catch to signing onto the site. Because it uses MLS data from the Vancouver Real Estate Board, the board insists that you have to enter fisherly.com through a realtor. “We cannot deal with clients because we don’t have real estate licences,” explains fisherly. com’s Varinder Kainth. “We cannot be showing them sold prices because we don’t have licences. Only a realtor can do all of this.” A Fisherly.com map from Oct. 30 showing real estate sales in Vancouver. If you zoom in,
more sales show up. Twarog is one of 114 realtors that have signed up to release the sales data through their VOW or Virtual Office Website. “The consumer has to sign in with a name and phone number in order to get access to the sold data,” said Twarog. “My sold history website is fisherly.com/6717000.” The data is now available to the public because last August the federal Competition Bureau won a court battle with the Toronto Real Estate Board to release sales data. “The next city the Competition Bureau was coming after was Vancouver,” said Kainth. “(The Vancouver Real Estate Board) released the data, but they are still making it very hard for agents to use the data … the realtors have to be approved by the board before they can invite their clients to be able to see the sold data.” When you’re able to access the site you can find sales data from Vancouver to Hope, as well as up to Whistler and on the Sunshine Coast. You can even find some sales data from some Gulf Islands — a 434 sq. ft. cottage at 617 Edith Point Rd. on Mayne Island sold for $510,000 on Sept. 22. The site also includes an “active” component for properties currently for sale. Both the active and sold side have features that allow you to zoom in by various categories, such as house/ townhouse/apartment,
A chart on the Fisherly.com website from Oct. 30 that shows ‘recent sold stats’ for several cities in the Lower Mainland.
price, square footage, price per square foot, bedrooms, baths, kitchens and lot size. It’s very up-to-date — you can search what sold in the last 24 hours, up to what’s sold in the last two years. There’s also a Market Insight section that gives “realtime statistics” from MLS sales. One-hundred-and-nine units have sold in Vancouver in the last 15 days, for example, with an average selling price of $1,451,585. One-thousand-eight-hundredand-seven units have sold in the last 90 days, at an average price of $1,186,304. A chart on the Fisherly. com website from Oct. 30 that shows ‘recent sold stats’ for several cities in the Lower Mainland. But that was at 4 p.m. on Oct. 29. The data is updated every half-hour, and changes constantly. “People can get live statistics of what’s happening,” said Kainth. “You can keep on scrolling to sub areas as deep as you want. There’s a really good graph that tells you units sold by price range. It’s amazing, it tells you exactly what the market is looking for.” Kainth has been putting together “tools for realtors” since 2003 through his company Pixilink. He started off being a “media provider” with photos and floor plans, but fisherly.com is far more detailed. Twarog said he put up his first website about 20 years ago and says he has invested $6 million in websites over the years. He currently has six websites, including BCCondos.net, which he said has 10,000 unique visitors per day. “At any given moment, I have 60 to 80 people online,” he said. “I use Google Analytics to show me which pages people are going on, how long they’re staying, all that stuff.” Twarog is looking to take BCCondos.net public to raise $3 million so he can update the site to include every property in B.C. He’s already done the research: there are 2,079,952 properties in
A Fisherly.com map from Oct. 30 shows real estate sales in Downtown Vancouver. ‘Mult’ means multiple units have been sold; when you click in, you can see which ones. Here we click on Trump Tower at 1151 West Georgia St., where 16 units have been sold in the last two years.
A Fisherly.com map from Oct. 30 shows real estate sales in Downtown Vancouver. ‘Mult’ means multiple units have been sold; when you click in, you can see which ones. Here we click on Trump Tower at 1151 West Georgia St., where 16 units have been sold in the last two years.
A Fisherly.com map from Oct. 30 showing real estate sales in White Rock and South Surrey.
Recent sold statistics for several Vancouver neighbourhoods on Fisherly.com.
the province by PID (for parcel identifier, which is how they identify individual properties). This includes 953,512 houses, 220,128 attached properties (i.e., townhouses or
duplexes), 347,464 condos and 556,839 listed as “other,” which could include anything from rental apartment blocks to commercial buildings and farms.
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