David & Mark Goodman, The Goodman Report

Vancouver’s affordable housing initiative recently proposed by Mayor Robertson has triggered heated debate amongst its citizenry, especially those residing in single-family neighbourhoods. While most support the search for financially reasonable solutions to alleviate our well-publicized housing shortages and sky-high costs (amongst the highest in North America), there are those determined not to accept change particularly if it affects them directly.

It appears the City’s new direction with the support of the newly created Housing Task Force, is that the creation of new rental supply or affordable housing will move adjacent to traditionally single-family communities and along arterial routes (i.e., Dunbar). The City intends to solicit proposals for increased densities and height to allow for new six-storey rentals, stacked townhouses and row housing.

We are disappointed that the Mayor and Council have solely targeted our single-family districts for their densification strategy instead of focusing on the existing dedicated RM, CD, FM (Multi-Family) zones and the WED (West End District) zones that have existed for decades.

It was in 1989 (over 23 years ago) that Vancouver first implemented a temporary moratorium on the demolition of rental apartments in the West End in order to prevent the “erosion of rental stock”—this “temporary” moratorium is still in place. In 2007, the City followed up with further restrictions by expanding this program and imposing Rate of Change regulations throughout the rest of Vancouver—namely Kitsilano, South Granville, Kerrisdale, East Vancouver and Marpole for all buildings 6 suites or more. We were in attendance in 2007 at City Hall when Staff clearly told Council that the proposal to establish the permitted Rate of Change at zero was to be for a period of 2 ½ years until they completed a rental housing strategy. We have now entered the 5th year with no end in sight. It is the City’s stated policy that existing rental buildings are to be protected at all costs. Unfortunately these “costs” are being borne by apartment owners. Many of these buildings are at or near the end of their economic life. Meanwhile owners are increasingly being forced to absorb significant capital expenses for roofs, piping, windows, heating systems, balcony and suite upgrades in buildings that most rational citizens would agree should be redeveloped.

Vancouver has approximately 1,780 apartment properties (6 suites or more) of which 280 are mid/high-rise buildings. By our calculations and based on the data and statistical research developed over thirty years of apartment sales and publishing The Goodman Report, it’s estimated that there are probably 4,300 acres of multi-family zoned land devoted to the remaining 1,500 or so rental buildings consisting of 2-4 storey low density wood-frame buildings averaging over 50 years of age. By virtue of the City’s restrictive policies, namely their misguided and politically expedient goal of chasing the tenant vote, property owners in the multi-family zones are no longer permitted to redevelop their property unless the rentals are replaced on a one-for-one basis. Unfortunately, Council refuses to rezone these existing areas outright which would provide for an increase in the allowable height and densities required to make the development of replacement rentals financially viable.

Other than a small handful of proposals under the STIR program, there are virtually no examples of purpose-built rentals being developed that could undoubtedly assist typical tenants looking for choice and quality. By the way, STIR projects were not permitted on sites where existing rental housing would be demolished.

The City has repeatedly rejected proposals from building owners in these higher density zoned areas for creative new housing forms that would allow for a viable mixture of rental and market housing options (now known as “inclusionary housing”). Perhaps Council should explain why they reject outright the idea of replacing an outdated and aging 100-unit rental building with a new 250-unit rental/market building? Why wouldn’t the City accept the benefits of the trickle-up effect? With the delivery of new pricier rentals being occupied by tenants able to afford better and more expensive digs, the supply of more affordable suites is clearly increased. In addition, CMHC confirms that over 30% of all new strata units are rented by investors. It is our view that this underutilized resource (~4,300 acres) found in the existing multi-family zones should be the main focus of the City’s desire to create supply and affordability—not moving to our single family neighbourhoods.

As Nathan Edelson and Mark Guslits, members of the Mayor’s Task Force of Affordable Housing, wrote in their Letter to the Editor, Vancouver Sun, Oct 17th, 2012, “An honorable dialogue relies on factual information.” We would certainly agree. It’s also noted in their letter, with some irony, that only one of the eighteen members of the Task Force is a developer. Why was the development community so poorly represented? Who do you think will finance and build all these housing projects while expecting some reasonable return on investment? Unfortunately for us taxpayers, Council’s latest response could well be: “We don’t know, so let’s create a new City paid bureaucracy with no experience to take on the financial and development risk just like we managed the Olympic Village development.”

source: The Goodman Report

If a client buys a new or substantially renovated secondary or recreational home in BC, but outside of Greater Vancouver or Victoria, before April 1, 2013, they may qualify for a provincial grant for the Harmonized Sales Tax (HST).

The grant for new secondary or recreational housing is directly administered by the BC Ministry of Finance. This grant should not be confused with the BC New Housing Rebate available for new residential homes bought as a primary residence, and administered by Canada Revenue Agency (CRA).

The grant for new secondary or recreation housing is 71.43% of the provincial portion of the HST paid on the new home up to a maximum rebate of $42,500. Secondary or recreational homes priced at $850,000 or more are eligible for a flat grant of $42,500. To be eligible, the secondary or recreational home must be:

• a new home (detached, semi-detached, duplex, condominium, townhouse) constructed or substantially renovated (more than 90%) together with land bought from a builder;
• a new home together with leased land;
• a new mobile home or float home;
• a new home bought through shares in a housing cooperative; or
• a new home constructed or substantially renovated (more than 90%) by the owner builder. To be eligible, buyers must meet all of the following conditions:
• the HST was paid on or after April 1, 2012 and before April 1, 2013 on the purchase of a new or substantially renovated house, or to build or substantially renovate a house;
• the buyer or a family member will use the house as a secondary or recreational residence;
• the home is located outside the Capital Regional District and the Greater Vancouver Regional District;
• the buyer (or any other co-owners) or family are the first occupants of the home, or in the case of a substantial renovation, are the first occupants after the renovation; and
• the home will not be used for commercial purposes (vacation rentals, bed & breakfast, small business) by an owner who is an HST registrant claiming input tax credits for some or all of the HST paid on the home.

In addition to the general qualifications above, buyers must meet other conditions depending on the type of home and whether the client buys or builds the house alone or with others. For example, if two or more individuals buy a new secondary or recreational home, or build or substantially renovate a home, each buyer must meet all eligibility conditions, but only one may apply for the grant as the claimant.

You do not have to be a BC resident to be eligible for the grant. Buyers of secondary or recreational homes must complete an application form and provide supporting documents within six months from the date the HST was paid and before October 1, 2013 (whichever date is earliest).

To learn more, contact:
1.877.388.4440 or visit www.fin.gov.bc.ca/rev.htm and in the search box type in HST Notice #13. For application forms, in the search box type in “grant new secondary residence.”

source: realtorlink

Vancouver is the world’s second-least affordable major city to buy a house, according to an annual survey of global housing markets.

The Eighth Annual Demographia International Housing Affordability Survey covers 325 metropolitan markets around the world.

It measures the markets using something called the “median multiple,” which is the median house price divided by gross annual median household income.

The study comes as Canadian banks worry about the state of the market and economists suggest prices could drop by as much as 10 per cent in cities such as Vancouver and Toronto.

Canada was the third most affordable market, behind the United States and Ireland. The markets that were surveyed were Australia, Canada, China (Hong Kong), Ireland, United Kingdom and the United States.

The report suggests the country is actually a very affordable place to own a home. There’s a catch, of course. It depends where you buy. And it’s a big country.

At 10.6 – with prices at $678,500 and incomes at $63,800 - Vancouver comes second only to Hong Kong in the major market category (cities over one million population), which has a rating of 12.6 ($3.1-million median house price, with income at $249,000).

Toronto sits in 18th place ($406,400/$73,600), sandwiched between Boston and Los Angeles with a rating of 5.5.

Montreal is the world’s 23rd least affordable market, with a rating of 5.1 ($281,700/$54,700).

“Canada’s Median Multiple was 3.5, indicating slightly deteriorating housing performance from last year’s 3.4,” the report states.

“All of the 128 affordable markets (having a Median Multiple of 3.0 or below) were in Ireland, Canada and the United States. There were 117 affordable markets in the United States and nine affordable markets in Canada and two affordable markets in Ireland.”

There were no affordable markets in Australia, New Zealand or the United Kingdom.

“The 87 moderately unaffordable markets were divided between the United States (64), Canada (19), Ireland (3) and the United Kingdom (1). There were no moderately unaffordable markets in Australia or New Zealand.”

The report said the world’s least affordable markets all had something in common – “each of the least affordable markets were characterized by more restrictive land-use regulations which materially increases the price of land and makes housing less affordable.”

The most affordable major market in the world was Detroit, with a multiple of 1.4 ($66,500/$48,700).

Over all, Windsor was the most affordable Canadian city of any size, with a ratio of 2.2 ($149,900/ $67,900).

January 23, 2012 Globe & Mail Update, available online at http://www.theglobeandmail.com/report-on-business/economy/housing/vancouver-among-worlds-least-affordable-housing-markets/article2311279/

FOR IMMEDIATE RELEASE – From the desk of Amalia Liapis

2012 MARKET FORECAST

As we move forward into 2012, the year of the Dragon, I thought it helpful to review some global activity that will have a measurable effect on our local real estate market.

China’s fourth quarter gross domestic product (GDP) rose 8.9% from a year earlier, beating analysts’ expectations of 8.6% growth. For the full year of 2011, China’s GDP rose by 9.2% compared to a 10.4% rise in 2010. It always amazes me how China can produce statistics so quickly but market analysts are always skeptical on how accurate the data is out of China as there is no way to reliably check the accuracy.

USA reporting season is in full swing for the December quarter and results here will direct US and world markets over the next few weeks. The US still has the world’s largest economy and, while it has slowed, guidance from the corporate world during reporting season will give a better idea of future recovery.  Again the next two weeks will be vital here, but so far so good. Economic data has been better than expected and this has been reflected in the US equities market now at five month highs. This is the year for the Presidential elections, so we can expect to see lots of big promises from both parties that should also help equity markets and real estate activity.

Europe’s financial problems will be with us all during 2012 as there appears no easy fix. The International Monetary Fund (IMF) is hoping to raise $500 billion US to help with the European crisis. The US Treasury and some non-euro zone European countries, such as Britain, are reluctant to contribute and this could leave Asian and other developing countries to make up the shortfall.

Greece is trying to work out with its creditors how much they will write off. An agreement of sorts was reached last year as a part of the Greek bailout fund that bond holders would take a “hair cut” of 50%. Now, Greece wants that to be taken out to 68% and could be close to an agreement; however Greek Banks don’t want to be included. No one does, but most will agree if everyone else will. The European Central Bank (ECB) is the largest holder of Greek bonds with a total of around €50 billion ($61.5 billion US). Hedge funds are threatening to sue the Greek Government to make good on bond payments so this issue could hang over any deal made. We could then expect Portugal to be the next to stand up for Portuguese bond holders to also take a “cut,” perhaps then followed by Ireland. If Spain and Italy start looking for a deal then the world economy will be in turmoil for a long time which will have an effect on the stock markets.  During these economic times people start to move their money into other investments and so real estate is an obvious choice. Demand for investment properties will create a momentum in our local market. 

Attached property sales in April 2011 totalled 622, a 1 per cent increase compared to the 616 sales in April 2010, and a 4.7 per cent increase from the 594 attached properties sold in April 2009. The benchmark price of an attached unit increased 2.4 per cent between April 2010 and 2011 to $514,670.

Warmest cheers!

The number of residential properties listed for sale on the MLS® in Greater Vancouver increased 9.7 per cent in 2010 to 58,009 compared to the 52,869 properties listed in 2009. Compared to 2008, last year's total represents a 7.3 per cent decline compared to the 62,561 residential properties listed in 2008. The number of properties added to the MLS® peaked in April and generally declined for the remainder of the year.

Sales of detached properties in December 2010 reached 769, a decrease of 14.8 per cent from the 902 detached sales recorded in December 2009, and a 121.1 per cent increase from the 348 units sold in
December 2008. The benchmark price for detached properties increased 4.0 per cent from December 2009 to $797,868. Sales of apartment properties reached 811 in December 2010, a decline of 29.7 per cent compared to the 1,154 sales in December 2009, and an increase of 94.5 per cent compared to the 417 sales in December 2008.The benchmark price of an apartment property increased 1.2 per cent from December 2009 to $387,115.