Housing Market Update Webcast November 2019

Watch BCREA Chief Economist Brendon Ogmundson discuss the October 2019 statistics.

Click here to visit our YouTube channel. Read the news release here.

For more information, please contact:
Brendon Ogmundson
Chief Economist
Direct: 604.742.2796
Mobile: 604.505.6793
Email: bogmundson@bcrea.bc.ca

Home Sales Continue Normalization Trend in October

Vancouver, BC – November 13, 2019. The British Columbia Real Estate Association (BCREA) reports that a total of 7,666 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in October, an increase of 19.3 per cent from the same month last year. The average MLS® residential price in the province was $724,045, an increase of 5.1 per cent from October 2018. Total sales dollar volume was $5.55 billion, a 25.4 per cent increase from the same month last year.

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“Most markets around the province are returning to a more typical level of sales activity,” said BCREA Chief Economist Brendon Ogmundson. “That recovery in sales and slower listings activity is putting upward pressure on prices in many markets.”

MLS® residential active listings in the province were up 1 per cent from September 2018 to 36,567 units, although down slightly when compared on a seasonally adjusted basis. With sales and listings down, overall market conditions in the province have tightened, with a sales-to-active listings ratio of 21 per cent.

Year-to-date, BC residential sales dollar volume was down 9 per cent to $45.3 billion, compared with the same period in 2018. Residential unit sales were 6.2 per cent lower at 65,468 units, while the average MLS® residential price was down 3 per cent year-to-date at $691,618.

For more information, please contact: 

Brendon Ogmundson
Chief Economist
Direct: 604.742.2796
Mobile: 604.505.6793
Email: bogmundson@bcrea.bc.ca

BCREA 2019 Fourth Quarter Housing Forecast: BC Homes Sales Carry Momentum into 2020

To view the BCREA Housing Forecast PDF, click here.

Vancouver, BC – November 6, 2019. The British Columbia Real Estate Association (BCREA) released its 2019 Fourth Quarter Housing Forecast today.

Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 1.8 per cent to about 77,100 units this year, after recording 78,505 residential sales in 2018. MLS® residential sales are forecast to increase 10.9 per cent to 85,500 units in 2020, just below the 10-year average for MLS® residential sales of 85,800 units.

“After a slow start to 2019, MLS® home sales in BC have embarked on a sustained upward trend since the spring,” said Brendon Ogmundson, BCREA Chief Economist. “The dampening effects of federal mortgage rules mean that rather than a return to the heights of recent years, home sales are simply returning to trend after sustaining a significant shock.”

As demand normalizes, the accumulation of resale inventory has reversed course in many markets around BC. We anticipate that this trend will continue in 2020, with sales and listings finding balance. For most markets, this will mean price growth that is in-line with inflation, though for some supply-constrained areas we are forecasting strong price growth. We anticipate that the MLS® average price will decline 2 per cent in 2019 before rising modestly by 3.6 per cent to $723,000 in 2020.

For the complete news release, including detailed statistics, click here.

For more information, please contact:
Brendon Ogmundson
Chief Economist
Direct: 604.742.2796
Mobile: 604.505.6793
bogmundson@bcrea.bc.ca

Kellie Fong
Economist
Direct: 778.357.0831
Mobile: 604-366-6511
kfong@bcrea.bc.ca

What to do if a seller leaves behind  a lot of junk when you move in?

WHAT TO DO IF A SELLER LEAVES BEHIND JUNKS WHEN YOU MOVE IN?

This situation while regrettable does happen from time to time. Here’s some suggestions on what you – the Buyer – can do.

Take pictures of the items that need to be removed.

Get an estimate from a contractor for removal (there are several companies in the Okanagan) Appleton Waste Services 1-800-663-5117, 1-800-GOT-JUNK (1-800-468-5865) or some waste management companies

Contact your REALTOR® and ask if they can contact the Sellers REALTOR® to discuss the situation and requesting a contribution to the invoice for removal. Give a deadline for response noting that an option may be to file a claim in BC Small Claims Court.

If no response is forthcoming then proceed to file a Claim in BC Small Claims Court Start Here

BC Monthly Real GDP Estimate for August 2019 (Updated: October 31, 2019)

The BCREA Nowcast estimate of provincial economic growth (expressed as year-over-year growth in real GDP) for August is 1.5 per cent, down from 2.1 estimated annual growth in July. That is the slowest estimated growth since December 2009. After a stronger start to the year, the BC economy has slowed in the second half and we are now tracking annual 2019 real GDP growth at 2.2 per cent.

Download the full report (PDF)

Growth of provincial GDP is a key indicator of economic activity, but provincial GDP data is only available annually and with a considerable delay. That’s why we developed the BCREA Nowcast – a tool for tracking monthly growth in the BC Economy. The Nowcast compiles monthly economic data into one easy to understand number, expressed as the year-over-year growth in the BC economy.

As the underlying economic data is released with a one- or two-month lag, our estimates for monthly growth will also lag real-time by two months (e.g., estimated growth in January will be published at the end of March). There are no adjustments to the model estimate except for those due to revisions to the underlying data.

For more information, please contact:
Brendon Ogmundson
Chief Economist
Direct: 604.742.2796
Mobile: 604.505.6793
Email: bogmundson@bcrea.bc.ca

Back-up offers: There’s a clause for that

Legally Speaking - Dan Jones

Roughly twice a year my heart stops when a claim comes to my attention. Why? Because a licensee reports that the seller has sold the property twice!

Naturally, the seller is upset. They only have one property to sell and two buyers demanding it.

In these instances, the seller typically accepts an offer for the property with subject conditions and then accepts a second offer for the property, also with conditions. The two buyers remove conditions and then the trouble begins, when both buyers claim to have a binding contract.

The seller alleges that the licensee did not ensure the second offer was accepted with appropriate terms, indicating it was a back-up offer and subject to the collapse of the first offer.

Back-up offers

The Real Estate Council of BC’s Professional Standards Manual specifically addresses offers made after a previous offer has been accepted—known as “back-up offers”. When dealing with a back-up offer, a licensee should always include a back-up offer clause. The suggested clause is:

  • “Back-up Contract Clause
  •  Subject to the seller ceasing to be obligated in any way under the previously accepted Contract of Purchase and Sale on the subject property on or before (date). 
  • This condition is for the sole benefit of the seller.”

Council recommends the licensee acting for the seller advise the seller to get legal advice if there are any attempts to renegotiate the first offer, as that may activate the back-up offer and create a risk that the property is sold to two buyers simultaneously. The licensee should also suggest the second buyer obtain legal advice under the same circumstances.1

Singh v. Sidhu

Back-up offers were the subject of a recent case of Singh v. Sidhu.2

In this case, the licensee acted on behalf of the sellers. He entered into a listing agreement, provided advice to the sellers on a list price, marketed the property, and finally, obtained an offer (the “Singh offer”). The Singh offer was countered by the sellers and ultimately accepted with several subject conditions. Conditions were removed and the date for completion approached. Prior to completion, the sellers contacted the licensee and told him that their family circumstances had changed, and they did not want to complete the transaction. The licensee was asked to convey that information to the buyers who had no agency.

Then the unthinkable happened—the licensee was told for the first time that the sellers had already accepted an offer for the property from a Mr. Sran (the “Sran offer”)! When both buyers asserted they had a binding contract, the parties headed off to court.

The sellers argued that the licensee was repeatedly told that any offers he obtained were to be back-up offers. The court found that the listing contract made no reference to back-up offers, the Singh offer made no mention of back-up offers, and the licensee was first told of the Sran offer two months after the sellers had removed conditions on the Singh offer. In doing so, the court added that it would have expected an amendment to the standard listing agreement if the licensee was told to only obtain back-up offers, as well as perhaps an amendment as to his right to commission on any offers that the sellers achieved through other means.

In the Singh decision, the court dismissed all claims against the licensee. The court awarded the property to the Singhs and ordered the sellers to pay damages to Sran for failing to deliver the property.

The court preferred the evidence of the licensee over that of the sellers, whose evidence was contrived, inconsistent and not supported by the documents. The licensee was found to have performed his duties properly, in conformity with the expectations of the parties and in line with his contractual obligations and ethics. Although this case was a clear win for the licensee, it’s a reminder that when you know you are dealing with a back-up offer, you should always include a back-up offer clause.

1. Professional Standards Manual at Part III, Trading Services, Acting for Sellers (h)(xi) .
2. Singh v. Sidhu, 2019 BCSC 1551. .

Posted by: Chris Johnston

GET IN TOUCH

Suite 1425, 1075 West Georgia St.
Vancouver, BC V6E 3C9
 604.683.7702
 1.844.288.7702
 604.683.8601
bcrea@bcrea.bc.ca

BCREA Calls for Safer Homes at the 2019 UBCM Convention

British Columbia Real Estate Association’s (BCREA) Government Relations team attended the annual 2019 Union of BC Municipalities (UBCM) Convention in Vancouver from September 23 to 27. On the first day of the convention, VP of Government Relations and Stakeholder Engagement Trevor Hargreaves participated in a panel presentation on anti-money laundering, along with Attorney General David Eby and Minister of Finance Carole James.

We also staffed a trade show booth and attended many sessions where we spoke with cabinet ministers, MLAs, mayors and local government councillors. We received interest across the province from delegates who shared BCREA’s commitment to building better neighbourhoods.

One of the issues we promoted is the need for the BC Government to develop a consistent process to remediate homes used to produce drugs. Whether legal or illegal, using homes to produce drugs can have serious negative impacts on the health and safety of future occupants. To promote the issue, we offered delegates hand sanitizer with the tagline, “If only there was a sanitizer for homes used to produce drugs.”

The second issue we showcased is the need for provincial leadership for floodplain mapping. Many homes are in high-risk flood areas, often unknown to the families living in them. Working with local governments, the BC Government should create a province-wide plan to map flood hazards for all BC communities and ensure the maps remain up to date.

The concerns of REALTORS® and BCREA on these issues and others were echoed in several convention sessions and resolutions. Some of the provincial government initiatives we learned about include:

  • a complete overhaul of the legislation used by government for emergency planning; the new approach will include more focus on minimizing the damage of disasters like flooding, so this works well with our recommendation for floodplain maps,
  • plans to develop a home plate policy for homes in the Agricultural Land Reserve; this would create requirements for where a home could be placed on a lot, in addition to how big it can be, and
  • the formation of a provincial-UBCM working group to consider ways to strengthen the regulation of short-term rental properties.

Posted by: Marianne Brimmell

GET IN TOUCH

Suite 1425, 1075 West Georgia St.
Vancouver, BC V6E 3C9
 604.683.7702
 1.844.288.7702
 604.683.8601
bcrea@bcrea.bc.ca

Market Momentum Continues into the Fall

Vancouver, BC – October 15, 2019. The British Columbia Real Estate Association (BCREA) reports that a total of 6,938 residential unit sales were recorded by the Multiple Listing Service® (MLS® ) in September, an increase of 24 per cent from the same month last year. The average MLS® residential price in the province was $697,943, an increase of 2.1 per cent from September 2018. Total sales dollar volume was $4.84 billion, a 26.5 per cent increase from the same month last year. “Markets across BC built on momentum from the summer,” said BCREA Chief Economist Brendon Ogmundson. “While the year-over-year increase in provincial sales was quite strong, home sales in most areas are simply returning to historically average levels.”

MLS® residential active listings in the province were up 4 per cent from September 2018 to 39,117 units and were essentially flat compared to August on a seasonally adjusted basis. Overall market conditions remained in a balanced range with a sales-to-active listings ratio of about 18 per cent. Year-to-date, BC residential sales dollar volume was down 12.4 per cent to $39.7 billion, compared with the same period in 2018. Residential unit sales were 8.9 per cent lower at 57,773 units, while the average MLS® residential price was down 3.9 per cent year-todate at $687,530. -30- For more information, please contact: Brendon Ogmundson Chief Economist Direct: 604.742.2796 Mobile: 604.505.6793 Email: bogmundson@bcrea.bc.ca

Market Momentum Continues into the Fall

 

 

 

 

 

 

 

 

 

 

 

Market Momentum Continues into the Fall

 

 

 

 

 

 

 

BCREA is the professional association for about 23,000 REALTORS® in BC, focusing on provincial issues that impact real estate. Working with the province’s 11 real estate boards, BCREA provides continuing professional education, advocacy, economic research and standard forms to help REALTORS® provide value for their clients. To demonstrate the profession’s commitment to improving Quality of Life in BC communities, BCREA supports policies that help ensure economic vitality, provide housing opportunities, preserve the environment, protect property owners and build better communities with good schools and safe neighbourhoods. For detailed statistical information, contact your local real estate board. MLS® is a cooperative marketing system used only by Canada’s real estate boards to ensure maximum exposure of properties listed for sale.

Canadian Employment Sept 2019

BCREA Economics - Dan JonesCanadian employment increased in September by 54,000 jobs, driven by Ontario (41,000). This brought the unemployment rate down from 5.7% in the previous month to 5.5% in September. Leading the increase in September was full-time employment, while part-time fell. Most of the increase was reported in healthcare, and accommodation and food services.

Employment in BC fell by 8,400 jobs in September. This marks the fourth consecutive monthly decline, driven by a decline in part-time employment (-17,200), while full-time employment rose (+8,800). By Industry, the most significant employment losses were in information/culture/recreation. The provincial unemployment rate fell by 0.2 percentage points to 4.8%. Compared to one year ago, employment in BC is up by 1% (33,400 jobs).

BC unemployment rate decrease - Dan Jones Employment decline in BC - Dan Jones
For more information, please contact:

Brendon Ogmundson
Chief Economist
604.742.2796
bogmundson@bcrea.bc.ca
Kellie Fong
Economist
778.357.0831
kfong@bcrea.bc.ca

BC Housing Sector Urges Federal Parties to Act on Affordability Recommendations

Practical Action on Housing Affordability

Too many British Columbians struggle to find an affordable home to rent or own because of a lack of housing options. Nearly six in ten uncommitted Canadian voters cite access to affordable housing as a top election issue, according to an August 2019 Angus Reid survey.

The next federal government has the opportunity to improve affordability by reducing taxes on new rental homes, encouraging housing supply to match transit targets and changing mortgage underwriting rules.

Six organizations representing the BC housing sector have partnered to make housing affordability recommendations that focus on much-needed solutions. In advance of the first debate, we urge each of the parties to adopt the following three recommendations to help address the housing and affordability challenges in British Columbia and the rest of Canada.

Remove GST as a Major Barrier to New Rental Housing

British Columbia has a rental housing shortage. Metro Vancouver’s overall rental vacancy rate has hovered around one per cent or lower for the last five years. CMHC estimates the region has had a net loss of 6,000 purpose-built rental units since 1991. At the same time Metro Vancouver’s population has grown by over one million people and is forecast to grow by an additional million in the next 20 years. This scarcity of rental housing has resulted in increased rental prices and stress for renters, a situation that will continue unless decisive action is taken.

A barrier to addressing the lack of new rental options is the punitive application of the five per cent GST on new purpose-built rental buildings. Under GST rules, a builder pays GST on the “self-supply” of a purpose-built rental building when construction is completed. This means that when rental developers intend to keep, manage and operate new purpose-built rental homes, GST rules require that they pay GST on the market value of the building and property at completion as if they’ve sold it. This is essentially a sales tax on an artificial transaction that adds millions of dollars to the cost of new rental buildings, even for non-profit home builders. A recent analysis of a 117-unit project in Vancouver showed how removing the GST could reduce monthly rents between 3.04 and 6.06 per cent. This additional tax negatively impacts renters, because rental providers must recover the costs through increased rents.

Removing the GST would make purpose-built rental projects more financially viable and could provide lower rental rates for affordable housing projects.

A barrier to addressing the lack of new rental options is the punitive application of the five per cent GST on new purpose-built rental buildings.

We recommend:

  • fully rebating or exempting the application of GST on new rental housing.

The federal government can encourage effective land use and transportation decisions by linking the need for more housing options with the significant federal transit funding that is planned. Setting new land use guidelines with housing targets for transit investments would unlock additional home options by supporting regional and local transportation plans.

We recommend leveraging contributions to local rapid transit projects by requiring housing targets.

We recommend:

  • leveraging contributions to local rapid transit projects by requiring housing targets,
  • providing preferred terms/rates to projects within CMHC’s Rental Construction Financing initiative that are within a specified distance from a current or planned frequent transit network,
  • topping up federal cost-share ratios for rapid transit projects, currently up to 50 per cent of non-land related capital costs, by a modest percentage for projects that meet or exceed housing targets, and
  • working with provincial and local governments, including Metro Vancouver, to explore a transit-oriented affordable housing fund to encourage more purpose-built rental housing, with a deeper level of affordability, near existing and new transit.

Adjust the Mortgage Stress Test and Amortization Rules

In 2018, the federal government enacted new mortgage rules that require borrowers to qualify for a mortgage at the higher of either the rate they’ve negotiated with their bank plus two per cent or the Bank of Canada’s five-year rate. This B-20 stress test has had a pronounced impact in BC, causing an estimated $500 million in lost economic activity.

The B-20 stress test should be a flexible policy that is adjusted regularly to respond to economic trends.

B-20 is now due for an adjustment for the following reasons:

  • the debt burden has increased for people unable to access conventional financing who must resort to more expensive alternative mortgage financing,
  • personal incomes nationally have risen by 12.5 per cent over the last five years, and
  • a borrower’s equity position increases throughout the term of a mortgage due to principal payments.

Changing the stress test would help achieve the government’s goal of ensuring Canadians don’t take on more debt than they can bear, while acknowledging ongoing economic trends.

We recommend:

  • reinstating 30-year amortizations for insured mortgages to make monthly payments more manageable,
  • qualifying all borrowers at their contracted amortization period (e.g., 30 years) instead of a 25-year period, and
  • excluding the stress test for mortgage transfers and switches, which better enables borrowers to shop for competitive mortgage terms at renewal time, and employing flexible stress tests that reflect the level of risk posed by the terms and conditions of the particular mortgage, including amortization period, fixed vs. variable rate and how interest rates are forecasted to change over the term of the loan.

Changing the stress test would help achieve the government’s goal of ensuring Canadians don’t take on more debt than they can bear, while acknowledging ongoing economic trends.