B.C. Financial Services Authority report recommends major changes to buying and selling process across B.C.

The regulator for British Columbia's real estate sector has recommended that the province adopt a so-called "cooling-off'' period of three business days to protect people buying a home, through legislation tabled this spring.

A report from the B.C. The Financial Services Authority released Thursday advises that sellers be required to provide reasonable access for a property inspection during the three-day homebuyer protection period, which would start the day after an offer is accepted.

It also advises that B.C. implement a "modest'' termination fee of 0.1 to 0.5 per cent of the price of a home to be paid by buyers who pull out of a deal.

The fee "strikes a balance between discouraging frivolous offers and recognizing the disruption in the selling process,'' the report said.

Additional recommendations include a five-day "pre-offer'' period after a property is listed, when a seller may not accept any offers, along with suggestions aimed at enhancing transparency in the transaction process.

For example, the report advises that key strata documents should be made available when a strata property is listed. The province could also require buyers to disclose to sellers any other active offers they've made, it suggests.

The report also recommends ending blind bidding and exploring an open bidding process used in many Scandinavian countries.

Homebuyers pressured to take 'unreasonable risks'


The B.C. government introduced amendments to property legislation in March. Finance Minister Selina Robinson tasked the independent regulator with consulting the real estate industry on the parameters of a cooling-off period and other potential measures.



Robinson says the province is reviewing the report, and her aim is to move "relatively quickly'' with the bill that passed its third reading last month, but the real estate industry also needs time to adjust and adapt to the changes.

The province has heard in recent years about homebuyers feeling pressured to take "unreasonable risks,'' such as waiving home inspections, which has led to "horror stories,'' Robinson said at a news conference on Thursday.

"I'm eager to move on these elements. I do need to have more discussion with [the B.C. Financial Services Authority] and others around what time frame is needed to act, certainly around the buyer protection period,'' Robinson said, noting there's a "whole range'' of other recommendations.

Aims to increase transparency, consumer protections

Blair Morrison, CEO of the B.C. Financial Services Authority, said at a news conference there would be "adjustments'' to the current real estate transaction process to bring the homebuyer protection period into force.

In developing the report, Morrison said the authority hosted 20 consultation sessions with more than 140 people from across B.C.'s real estate sector.

"We think this is core, basic, good consumer protection that should apply throughout British Columbia,'' he said.

"We want to make sure this works for the sector, for the real estate [agents], for the lawyers and other parts of that process,'' he added.

He said the review was not intended to address housing affordability in B.C.

The report also considers "blind bidding,'' a common practice in which sellers are not compelled to tell prospective buyers about competing offers.

That lack of transparency can "skew the perception of market fairness and potentially lead to distrust in the real estate transaction process,'' it said, pointing to concerns about inflated valuations or buyers overpaying for a home by offering a price that significantly exceeds the next highest offer.

The regulator looked at open-bidding alternatives, advising B.C. to consider options such as live auctions and anonymous disclosure of other offers.

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 Whether you're buying or selling; looking for your first home, upgrading or downsizing, Call Joel Korn to achieve your Real Estate goals. Joel Korn 604.722.4588



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Right next to Lougheed SkyTrain station, a new 80-storey highrise is under consideration by Burnaby city council.




development wrote, "The tower podiums will share common thematic elements and will be interconnected with sky bridges allowing pedestrian movement between buildings and a connection to the Lougheed Mall Precinct."


The proposal includes a total of 1,466 market strata residences.


Both buildings incorporate a mix of one-, two- and three-bedroom units.


The development will meet its inclusionary rental obligation (required by Burnaby's Rental Use Zoning Policy) by providing 405 rental units at the Burnaby affordable rate of 20% below the market median for Burnaby North in a different building at nearby 3846 Carrigan Crt.


There are 311 adaptable units planned for phase 1 (147 in the first building and 164 in the second) with 173 accessible parking stalls.


The total number of residential parking stalls is 1,612, with 1,067 spaces for commercial parking.


The staff report says the developer will support alternative modes of transportation by including a subsidy for a two-zone transit pass to 15% of the strata units for 24 months, 14 car share parking spaces, and a fund to support car share services — equivalent to one car per 100 units, with memberships available to all strata residents.


The development will include work lounges, parcel storage rooms and a bike repair and storage room (the report allocates 3,374 spaces for residential, visitor and commercial bicycle parking).


It will also include a fitness centre, yoga studio, swimming pool, private party rooms and children's play room.


Further phases of the development are waiting on an agreement to be reached with the developer and the British Columbia Transportation Financing Authority, a Crown corporation which owns the private driveway access for the bus exchange off Gatineau Place.


The tallest building in the province is currently Vancouver's Living Shangri-La at 62 storeys. In Burnaby, construction on the Gilmore Place development is underway for up to 65 storeys.


There will be a public hearing regarding this development on May 31.




Whether you're buying or selling; looking for your first home, upgrading or downsizing, Call Joel Korn to achieve your Real Estate goals. Joel Korn 604.722.4588

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'Never again,' said economists decades ago. But inflation plus stagnation may be on the way’

Like a boogeyman to scare children, stagflation is rolled out every now and again by economic prognosticators to warn of how awful things can get if we're bad. Perhaps that's why many economists don't seem to be taking the threat seriously.

Similar to the response after warnings of inflation in 2020, most financial commentators have been saying that the threat of stagflation — an unusual combination of a stagnant economy and steady inflation — is small.

But U.S. Federal Reserve Chair Jerome Powell did not seem as confident this week as he has been in the past.


"I think we have a good chance to restore price stability without a recession, without, you know, a severe downturn," Powell told a news conference on Wednesday.

"No one thinks it's easy, no one thinks it's straightforward, but there is certainly a plausible path … to do that."

Slaying the inflationary dragon

Powell made it clear that getting inflation under control was the priority, praising his predecessor Paul Volcker, who finally slew the inflation dragon, with interest rates of nearly 20 per cent that drove the 1980s economy deep into recession.

While we're currently far below those levels, Powell pushed rates up half a percentage point, saying he expected the next two moves would also be half-point increases.

But there are some who fear the current U.S. central banker has waited too long to hike rates, allowing rising prices to get a foothold and making recession inevitable, even as North America faces surging imported inflation.

A number of prominent U.S. commentators, including former U.S. treasury secretary Larry Summers and economist Mohamed El-Erian, have been warning that rate hikes, while too late to stop people from expecting persistent inflation, could themselves nudge the U.S., Canada and the world into recession — and into stagflation.

Recently that view has spread beyond the worrywarts, as demonstrated by the normally cautious Conference Board of Canada putting out a report entitled Could Inflation's Surge Lead to Stagflation?, explaining how it could happen in Canada.

The weird thing about stagflation, and why it so seldom occurs despite repeated frightening predictions, is that under normal circumstances, two traditional preconditions — inflation and falling GDP growth — are economic opposites and don't often occur together.


Worst of both worlds

According to the guidance of the Phillips curve, which some say was out of whack even before the pandemic, inflation and economic strength (as measured by job creation) rise together. 

But in 1965, Iain Macleod, the British Conservative politician who coined the term, was among those who noticed the Keynesian rule of thumb wasn't working.


"We now have the worst of both worlds; not just inflation on the one side or stagnation on the other, but both of them together," Macleod is recorded as saying in the British House of Commons, where he was finance critic. 

"We have a sort of 'stagflation' situation," he said. "And history, in modern terms, is indeed being made."

As with many ideas in economics, there is a lot of argument over the whys and wherefores. But when stagflation swept the U.S. and Canada in the 1970s, blame was cast on the supply shock brought on when OPEC members suddenly demanded an increased price for their oil, pushing already-high inflation even higher and simultaneously battered the economy.


Never again, whoops

"When I was a graduate student, all the professors would say, 'Oh, we'll never see this era again of letting the inflation genie out of the bottle,'" economist Constance Smith, a professor emeritus at the University of Alberta, said wryly.

Like others who lived through that time, she remembers it as being "unpleasant" — a term echoed exactly by Powell from his own memories, as repeated attempts by central banks to quash inflation failed to convince people that prices would stop rising.

For more information or questions regarding your property value in the current economical climate, or if your thinking about purchasing in this economy; 

Call Joel Korn at 604.722.4588 to learn the advantages available to you, by stretching every dollar. 

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Canada’s housing market will “moderate from historic 2021 levels” in terms of price, sales, starts and rentals over the next year – but not to the point where owning or renting a home will be any more affordable than it is now.

That is the forecast published by the Canada Mortgage and Housing Corporation, or CMHC, this morning in its latest Housing Market Outlook. The report noted that, despite the expected moderation in prices and the number of sales throughout Canada, costs growth will continue to outpace income growth in several major cities – placing “greater pressure on the affordability of home ownership.”

“Improving levels of employment and immigration are expected to be key factors, as the impact of pandemic restrictions continue to recede,” said CMHC chief economist Bob Dugan in a statement about sales, prices and housing starts remaining elevated in 2022. “In 2023 and 2024, the growth in prices will trend closer to long-run averages, with sales and starts activity expected to remain above 5- and 10-year averages.”

The report paints the same picture for Metro Vancouver, Canada’s most expensive real estate market. According to the CMHC outlook, price growth of homes should slow down this year from the blistering pace seen in 2020 and 2021 – but immigration-driven demand and rising debt servicing costs will lead to a worsening of affordability.

CMHC projects the growth rate of home prices in the Greater Vancouver region will not continue on its double-digit rate beyond Q1 2022, and the rate of growth in prices will actually fall to below 5% year-over-year by 2023.

When asked during a media call on the forecast’s release, Dugan - despite noting a variety of factors - laid majority of the blame on one specific cause.

“Despite the strong base of housing starts, the housing stock in Canada is too low, and the pace of new home construction forecast over the next several years will not be sufficient to rectify the shortfall,” he said. “Much more housing supply is needed.”

Dugan added the tightness in the home sales market will likely have a knock-on effect on rents, as people who might have been able to afford entry-level homes will now likely be forced to stay in rentals - further stressing the lack of inventory while keeping rental demand at a high level.

“[Housing] supply has been so low relative to demand that even if you have demand pull back somewhat, I think you can still have a situation that continues to drive prices higher,” he said.

”We do definitely expect price growth to moderate going into the next year as mortgage rates go up,” Dugan continued. “… but the main idea is that supply constraints remain binding in this environment and it continues to put upward pressure on prices... We need to do a lot more work on supply in order to sort of get to the point where we can stabilize prices and allow incomes to catch up.”

Braden Batch, CMHC’s senior analyst of market insights (and author of the outlook’s chapter on Vancouver), noted there are variables in the projection of continued growth for the Lower Mainland’s real estate market. Batch noted that “trouble in the national and global markets” – ranging from interest rates to other economic pressures on B.C. home buyers – could slow market activity to a greater degree than what’s projected if Metro Vancouver cannot remain insulated.

Similarly, total housing starts will fall this year in Metro Vancouver and shift towards row and semi-detached units, but shortage in skilled trade labour and supply chain bottlenecks will continue to push costs of construction higher.

“Vancouver will emerge from the pandemic with a strong economy,” Batch said in the report. “Immigration will be a major demand driver over the next few years, but a lack of supply at all levels and tightening credit has worsened affordability.”

The theme of continued unaffordability stretches to the rental market. The CMHC is projecting Vancouver’s rental vacancy rate to remain around 1%, all while the economic and migration rebound will put new pressures on demand, leading to rent increases.

“Long development timelines and the current level of construction won’t provide enough new units in the next three years to raise vacancy rates or to provide sufficient competition among property owners to lower rents,” Batch said. “Upward pressure on rents is inevitable for much of the market, particularly when rent controlled units turn over and reprice for the current market.”

Overall, the forecast projects the MLS average price for the Vancouver CMA to be in the range between a high of $1,459,000 and a low of $1,064,000 – showing no significant deviations from 2021’s average of $1,150,357 and demonstrably higher than the pre-COVID level of $923,070 recorded in 2019.

Home resale transactions this year will range between 44,000 and 60,000, again not venturing far from 2021 and 2020 figures (61,829 and 44,468, respectively). Again, those projections are significantly higher than levels recorded pre-pandemic in 2019 (35,715 sales transactions).

Call Joel Korn for more information at 604.722.4588

Article Sources 

The full report can be found at https://biv.com/article/2022/04/cmhc-no-affordability-relief-sight-vancouver-housing-2022

CMHC - Original Source

https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/market-reports/housing-market/housing-market-outlook

 
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Categories:   Stagflation-May11
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