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

Chrystia Freeland, who also serves as the finance minister, says the issue is her top domestic concern amid affordability crisis

What is property tax?

Property tax is paid by landowners and funds municipalities’ public services, such as emergency services (fire, police, and paramedic), public schools, parks and trails, as well as road and sewer maintenance. The property tax is set based on the percentage of the market value of a given property, whether it be residential, commercial, industrial, or farm, and is paid to your municipality or regional municipality.

Can I be exempt from property tax?

Some properties and owners may be exempt from paying this tax, including religious buildings, low-income households, and any federal or provincial property. Municipalities set these rules, so it’s best to consult your local municipality for more details on exemptions and eligibility.

How is property tax calculated?

Property tax is determined by multiplying the value of a property by the base municipal and education taxation rate. These rates are set according to the type and use of a property by elected officials based on the city’s budget. They’re also determined by how much revenue comes from services, fines, and provincial transfers. Property values are determined with regular property tax assessments. 

For instance, if you owned a property valued at $300,000 and the combined municipal and education tax rate is 1.13%, your annual balance would be: $3,390. 

Your municipality will make the information in your tax statements as clear as possible so you know exactly what makes up your property tax. Some charges like waste removal or rural stormwater drainage (ditches) may show up as a flat fee, depending on your municipality or property location.

Your municipality will also give a detailed breakdown of how your tax dollars are being distributed between things such as emergency services, library services, roads and traffic, etc. Understandably, rates differ broadly across Canadian municipalities based on the types of properties, and density. 

What is a property assessment?

Property assessments are required to determine the value of your property, which then factors into how much your property tax will be. Keep in mind, property assessments are different from a home inspection or appraisal. A property assessment is the process of determining the value of a property based on the open market sale averages of other properties in the surrounding area. In the case of residential properties, the location (neighbourhood), size of the lot, building type, size, age, and the building materials used, plus any updates or additions, are taken into account to determine value.

Why are property assessments necessary?

Since all properties are different, assessments are necessary to ensure everyone pays a fair share based on the value of their property and how said property is being used. First, property values change over time, either appreciating or depreciating in value, depending on real estate market trends in those areas. Secondly, population sizes change when urban and suburban centres expand with new construction. Property assessments also play a part in determining taxation rates. If property values increase more in comparison to the municipality’s budgetary needs, a tax rate reduction may result.

Who assesses properties, and how often?

Assessments are handled differently in each province and territory and are conducted by either the municipalities, a specific branch of the provincial government, or by independent organizations commissioned by provinces and/or municipalities. Assessment intervals also differ from province to province. 

For instance, in British Columbia, BC Assessment was formed to assess all properties annually in the province. Ontario has a similar organization, MPAC (Municipal Property Assessment Corporation), a non-profit corporation whose members are made up of Ontario municipalities, and who conduct assessments every four years. 

To dig a little deeper into assessments for your specific province, check out the links below.

• British Columbia

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While CREA Café is curated specifically to help your business grow and thrive, Living Room content is perfect to share with your clients.

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If you’re on the hunt for a first home, or even settling in, you’re likely bracing for the inevitability of paying property taxes. You probably saw the annual property taxes displayed on REALTOR.ca property listings, and might be wondering who sets these rates, what purpose property taxes serve, and how tax rates are determined.

Fortunately, you’re in the right place! Let’s put the magnifier on property tax assessments across Canada.

NEW CREA Pilot Program Will Let Homebuyers See All Offers in Real Time

“Multiple offer scenarios have become increasingly commonplace in today’s real estate environment”

The Canadian Real Estate Association (CREA) is proud to announce a pilot project that will display real-time tracking of offers on REALTOR.ca listings, a first for Canada. Openn Offers, a ground-breaking offer management software provided by property technology company Openn Negotiation, has been selected to be integrated with REALTOR.ca, Canada’s No. 1 real estate 

Openn Negotiation, an Australian property technology company, has been in negotiation with Canadian Real Estate partners.  With CREA saying that it will kick off sometime this summer in select markets across the country. 

“Multiple offer scenarios have become increasingly commonplace in today’s real estate environment,” said CREA’s Chief Executive Officer Michael Bourque. “Canadian property buyers and sellers seek greater confidence in the process, while Canadian realtors seek tools to enable and more easily manage these situations. We’re very excited about the potential of this pilot to address both.”

The announcement came just one day before the federal government announced its intention to ban blind bidding Canada-wide in the 2022 Federal Budget. This followed a 2021 campaign promise made by Prime Minister Justin Trudeau to create a Home Buyers’ Bill of Rights, which would include the banning of blind bidding.

As rising home prices and fierce bidding wars rage-on, Canada is looking to follow the lead of other countries like Australia which use an open bidding system as a means to cool Canada’s housing market. Duncan Anderson, executive director of Openn and president of Openn North America, says that since launching, their software has offered Australian homebuyers much needed transparency.

“Through six-plus years of development, execution, and innovation in the Foreign market, we have proven that both the real estate professional and consumer benefit greatly from enhanced transparency,” Anderson said. “We are thrilled by the opportunity to partner with CREA to introduce Openn Offers to the Canadian marketplace.”

“ It’s important to note, however, that all of Australia’s home sales, as well as a large portion of New Zealand’s, are carried out via a live auction. And in Sweden, bids placed on a home are not legally binding. Both are significant departures from Canada’s typical home buying process”

Some have questioned federal government’s decision to implement open bidding, with one report from policy think tank Smart Prosperity Institute stating that not only is there no evidence to support the government’s claim that blind bidding causes prices to soar, but that actual evidence from countries like Sweden, New Zealand, and Australia suggests open bidding will lead to higher prices. It’s important to note, however, that all of Australia’s home sales, as well as a large portion of New Zealand’s, are carried out via a live auction. And in Sweden, bids placed on a home are not legally binding. Both are significant departures from Canada’s typical home buying process.

 “In Ontario, for example, the Real Estate Brokers Act prohibits realtors from revealing the dollar amount of competing bids, but requires they reveal how many other offers there are. In British Columbia, on the other hand, buyers must rely on a selling agent’s willingness to reveal how many other offers they’ve received”

The federal government has not yet provided any details on what exactly the blind bidding ban would entail or how it would be implemented. Currently, each province or territory have their own varied rules and regulations when it comes to open bidding. In Ontario, for example, the Real Estate Brokers Act prohibits realtors from revealing the dollar amount of competing bids, but requires they reveal how many other offers there are. In British Columbia, on the other hand, buyers must rely on a selling agent’s willingness to reveal how many other offers they’ve received.

Despite the current rules, the Real Estate Board of Greater Vancouver is on board with the CREA pilot.

“This opportunity is well-timed and well-suited for our market,” said Jeff King, CEO of the Real Estate Board of Greater Vancouver. “We are excited to participate in a by realtors for realtors solution that provides equality of access to information and facilitates increased transparency for the consumer.”

Ways to Profit from Real Estate Investments

There are many ways to profit in Vancouver’s hot housing market and now is the time to buy. In Vancouver’s rapidly appreciating market, many are sitting on built up home Equity, which they are eligible to borrow from. I will go more into detail about home equity in my next article; however today I will be going over a few ways to invest in Real Estate with Mario Felicella.  Joel’s over 25 years industry experience, his market knowledge and relationships have elevated him to the top of Vancouver’s Realtors List. Here are a few ways Joel recommends as great opportunities. 

1. Rental Properties

Owning rental properties can be a great opportunity for individuals who have DIY renovation skills and the patience to manage tenants in order to fully maximize your profit from your investment. This strategy however requires a substantial capital to finance upfront maintenance costs and to cover vacant months; due to tenants.

Pros

• Provides a regular income stream and properties can appreciate.

• Maximizing Capital through leverage.

• Many tax-deductible associated expenses.

Cons

• Difficulty managing tenants, potential damage. 

• Reduced income from potential vacancies. 

2. House Flipping

This is an option better suited for an experienced investor with significant experience in real estate valuation, marketing and renovation. Requires capital and the ability to do, or manage repairs as needed. Typically Flippers often look to profitably sell the undervalued  property in less than 6 months. 

 Pros

• 1. Ties up capital for a shorter time period

• 2. Can offer quick returns.

 Cons

• 1. Requires a deeper market knowledge, and understanding of market value and timing.

• 2. Fluctuating markets, cooling unexpectedly

3. Real Estate Investment Groups

REIGs are ideal for people who want to own rental Real Estate without the hassles of management. Requires a significant capital cushion and access to financing. 

Pros

• 1. Income and Investment Property Appreciation.

• 2. More hands-off approach than owning/managing rental properties on your own.

Cons

• 1. Vacancy risks; finding the right tenants.

• 2. Fees more similar to those associated with mutual funds. 

• 3. Susceptible to unscrupulous managers

4. Real Estate Investment Trusts

REITs are suitable for investors in need of portfolio exposure in Real Estate without your traditional Real Estate Transaction. Corporation uses investors’ money to purchase and operate income properties. Purchased and sold on major stock exchanges like any other stock.

Pros

• 1. Essential dividend-paying stocks

• 2. Core holdings tend to be long-term, cash-producing leases.

Cons

• 1. Leverage associated with traditional rental real estate does not apply. 

5. Online Real Estate Platforms

Real Estate investing platforms are for those who want to join others in investing in a bigger commercial or residential deal. The investment is made via online real estate platforms which are also known as ‘real estate crowdfunding’. Still requires significant investing capital, although less than what’s required to purchase the properties outright. 

Pros

• 1. Can invest in single projects or portfolio of projects.

• 2. Geographic diversification.

• 1. Tend to be illiquid with lockup periods.

• 2. High management fees.

Key Takeaways

Aspiring real estate owners can buy a property by using leverage, paying a portion of its total cost upfront, and paying off the balance over time. One of the primary ways in which 

investors can make money in real estate is to become the landlord of a rental property. People who are House Flippers, buying up undervalued or distressed  real estate, fixing it up, and selling it, can also earn significant income, by maximizing their profits. Real estate investment groups (REIGs) are a more hands-off approach to make money in real estate. Real estate investment trusts (REITs) are basically dividend-paying stocks. 

Joel Korn -  Sutton Group West-Coast Realty, does not personally endorse any of these methods specifically, and his expertise is in methods 1. Rental Properties  and 2. House Flipping.

For more information please call Joel at 604.722.4588. Sutton Group West-Coast Realty.

As we age, our elders will come to a time when they may not be able to care for themselves at home. Generally these types of situations involve family members assisting with the sale of a property which they have not legally inherited while their relative transitions into an assisted-living facility or senior community.

So, what exactly does the process of selling your elderly relative's home entail? Whether it's your grandparents, Mom or Dad; Joel Korn is the right Realtor for the transaction. By making the process seamless and efficient, Joel understands the difficulty of the situation and delivers on your goals every time. 

Joel Korn, a REALTOR®, Vancouver-based agent and salesperson with Sutton Group West Coast Realty,  and he will walk you through the important steps of selling a home for an aging or ailing relative.

Recruit the right REALTOR®

This starts with hiring a REALTOR® who understands these types of real estate transactions. Joel’s industry experience in this very situation helps to ease the stresses of the family relationship.

You may want to consider working with  Joel who is a qualified Realtor® with over 25 years experience, multiple accolades and awards, and also been a member of the prestigious Medallion Club.

Joel understands a Real Estate transaction is not just the selling of the home, but a relationship in which you really need to go above and beyond for your clients. By keeping what's in the best interest of the client, Joel has managed to obtain multiple clients repeat Real Estate Transactions, and many more referrals. 

There is no simple, straightforward solution when it comes to working with senior homeowners. Each with a very unique set of circumstances with their finances, health, family and property requiring Joel’s expert skill-set.

Get all parties involved

Joel likes to meet with the client and their family to better understand the circumstance and each party’s intentions. What goals are they trying to accomplish with the sale of their home? And to determine the next steps after the sale of the property in terms of living arrangements, living needs, etc.  

Understanding wills, powers of attorney, lawyers, who the decision maker and where the money from the sale of the property is going. ie: long-term care expenses.

In cases where conflict or heavy stress between family members, hiring a counselor or neutral party to alleviate tensions and set the groundwork for a successful sale. Joel’s industry experience has helped him succeed in the ugliest of situations, and understands the importance of satisfying the homeowner within reason. He treats every transaction as if it were his family.

Decluttering the space by organizing and cleaning up unwanted/needed possessions. Valuable or sentimental items should either be left to someone. It’s crucial to review and document these pieces ahead of preparing the property for sale. 

They may not be cognitively available and you really need to make sure everybody is on the same page because arguments arise easily, like selling off sentimental possessions which were promised to a child.

Prepare both the home and the seller

Putting a home on the market is a stressful event for any homeowner, but it can be especially difficult for vulnerable seniors or ailing relatives. 

In some cases, Joel suggests that it may be more beneficial to move the senior out prior to the home being listed. If repairs are needed on the property or people are coming over to assist with packing, Joel is always present with the senior seller so they’re not nervous with unfamiliar people coming and going from the house. 

You might be tempted to completely stage and renovate the property prior to listing it. The priority should be to ensure the property is clean and free of any garbage, with some repairs and touch-ups made on the property where needed, like painting or removing damaged carpet. 

Large repair jobs or renovations are not necessary, as longs as its up to city standards, it my be worth selling as is.

Take your time with offers

In today’s competitive housing market where there’s a shortage of supply, it doesn’t take long for purchase offers and hopeful buyers to quickly come knocking on your door. When working with a senior homeowner, however, the pace of the offer phase may be different than normal.

Joel meets with his senior clients in person, making sure the offer allows for a couple of days for the client’s lawyer to ensure everything is above board. In some cases, an offer presentation date provides some control over the pace and process of how offers are received and reviewed. 

Joel’s priority will always be strictly the client and what’s in their best interest. If they’re cognitively available, he would sit with them and explain each one.

If you’re starting the process of selling the home of an aging or ailing relative, consult the advice of a Joel Korn REALTOR® 604.722.4588.