Time to get ready for a return of the popularity of the five-year mortgage? Twenty years ago, in the mid-1990s —conventional wisdom still held where most home buyers and mortgage holders opted for five-year-closed mortgages, as a hedge against the ominous threat of rising interest rates. The security of locking in a constant, predictable mortgage payment for the long term was more valued than hunting for the lowest possible variable rate mortgage.


© Used with permission of / © Rogers Media Inc. 2017. The Bank of Canada says to expect higher interest rates in 2018, right when nearly one in two mortgages will be up for renewal. THE CANADIAN PRESS/Sean Kilpatrick 


Times changed, of course, as everyone piled into short rates that floated. Why? Because for the past few decade they have floated down. Super-low-rate variable mortgages became the preferred salve for new homebuyers and helped drive the boom in real estate prices because buyers could afford more house and carry more debt.

But 2018 doesn’t bode well for borrowers and mortgage holders. Not only will a more stringent stress test be put in place for those seeking or renewing a mortgage, but the Bank of Canada’s November Financial System Review, issued this week, raised another complicating factor; that being, nearly one in two Canadian mortgage holders is set to renew their mortgage in the next 12 months and will face higher rates.

Some forecasters are expecting several additional rate hikes during 2018, and it could all add up to a shock for consumers, the real estate market and the broader economy. More rate hikes could close the gap between short-term and longer-term mortgages and start to push consumers away from variable and into fixed mortgages where they would be insulated from the immediate impact of further increases.

How Canadian homes became debt traps

In January, a stress test that goes into effect that includes new rules introduced by the Office of the Superintendent of Financial Institutions (OFSI) on mortgage lending. OSFI is setting a new minimum qualifying rate, or “stress test,” for uninsured mortgages (mortgage consumers with down payments 20% or greater than their home price).

The rules now require the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada (presently 4.89%) or 200 basis points above the mortgage holder’s contractual mortgage rate. So no matter how much money a homebuyer puts down to purchase a home, they will have to pass the stress test.

Additionally, the BOC report confirms that it will slowly but surely pace itself with interest rate hikes next year in order to achieve more normal interest rate levels that back away from the super low rates we’ve experienced in recent years. So far this year, the Bank has raised their key interest rate twice as it monitors how the higher borrowing costs will impact the economy.

First-time home buyers, as well as homeowners who need to renew their existing mortgages in 2018, will face headwinds from stricter mortgage qualification rules as well as interest rate hikes. The result of such increases will be immediate. “We see a 75-basis-point increase in the bank rate in 2018, with the three 25 bp increases coming in March, July and October,” says Jennifer Lee, senior economist at BMO. (25 basis points equals a quarter of a percentage point.) “This will dampen housing activity.”

Benjamin Tal, senior economist at CIBC, somewhat agrees with this assessment but his view is more tempered. Tal sees the economy chugging along at about 2% GDP going forward after a blip to 3% GDP earlier this year. “The consumer played a big part in lifting the economy this year but we’re not sure they will continue to do so,” says Tal. “We just don’t see big demand out there and that’s the recipe for a slow down to us.”

As for interest rates, Tal sees the Bank of Canada possibly moving twice in 2018 but he believes it’s likely we’ll see less than that—and maybe even no rate increases at all. “The economy is slowing, and negotiations over NAFTA are still unresolved,” says Tal. “That’s a big deal, and if NAFTA is terminated by the U.S., we believe any rate increases will be put on hold. So far Canada hasn’t been responsive. We’ve been paralyzed… But all that will change if NAFTA ends.” BMO’s Lee agrees with Tal. “All of our BMO economic projections for 2018 assume that NAFTA is not terminated,” says Lee. “But everything changes if NAFTA is impacted.

So, what does that mean if you’re going to be renewing your mortgage in 2018? Or simply buying a new home as a first-time buyer? “Meeting the new, more stringent mortgage stress test will have a similar effect as an interest rate hike,” says Tal. So that’s already built into the cake.

Tal says that about 12% of the total mortgage market will be impacted. “Some of those borrowers will go with a short-term adjustable rate mortgage and they will qualify, while others will lengthen the amortization period of their mortgage to qualify. But there will also be a third group who will go to alternative lenders because those lenders aren’t subject to the new 2018 mortgage stress test. As the BOC report says, “17% of outstanding uninsured mortgages are held by provincially regulated credit unions which are not affected by the new OFSI guidelines.” So, it’s possible that many of those who want a home and mortgage could qualify for one of these alternative mortgages.

Even so, Tal believes the final impact on the housing industry next year will be huge: a reduction in demand of 6% to 7%. “This means that first-time homebuyers will stay home longer, rent longer, or simply buy a home that’s cheaper and more affordable for them,” says Tal. “The impact will be felt nationwide, not just in large cities like Vancouver or Toronto. It will be an across-the-board impact because of lower household incomes in other parts of Canada.”

Lee from BMO agrees, adding that some could even tap the Bank of Mom and Dad to meet the mortgage requirements. “Many buyers will be looking for a house longer, and they’ll have to change their expectations by buying a smaller home with perhaps a longer commute,” says Lee. And those who are renewing could simply forgo moving to a new lender and stay with their current mortgage holder so they don’t have to subject themselves to the new test.

Whatever home buyers and homeowners decide, Lee is sure of one thing: home sales will take a big hit. “This year home sales were down 4.5% while prices are up 14.5% year over year,” says Lee. “But next year we forecast a 3% sales decline and a small 1.5% price increase. For 2019, we see sales remaining flat and price increases of about 2.5%—very modest. Of course, these numbers factor in the interest rate hikes and the certainty that NAFTA remains in place.”

And while Tal says that a majority of homeowners have been behaving conscientiously and have been using low interest rates to speed up principal payments, it’s first-time homebuyers who will be impacted most. “They are vulnerable and have been blinded by the affordability mirage,” says Tal.

For Tal, the key to a successful rate reset doesn’t lie in how many rate hikes are in the cards, but in the timing of those rate hikes. And that’s where expected BOC rate hikes could go off the rails next year. “Over what period of time will those rate hikes happen? It’s better to do it in three to five years rather than quickly. I don’t see an appetite for the Bank of Canada to raise rates quickly this [coming] year.”

Lee sees the BOC’s march towards higher interest rates through a different lens. “It’s not a bad thing to make sure homebuyers can handle higher rates,” says Lee. “It’s important to ensure that Canadian consumers and mortgage holders can cope in a rising rate environment.”

Provided by: Julie Cazzin with Money Sense


About five decades ago, Vancouverites lived almost entirely in single-family homes and rental buildings. The majority of the rental was purpose built, a lot of it in West End towers, with midrise rentals scattered throughout other parts of the city.

Some co-op housing had been built. But condos didn't exist.


"If you wanted to build a higher density, you had to build rental," University of Toronto professor David Hulchanski says.


Condo ownership was introduced in the late 1960s but took several years to catch on. In terms of development, condos – commonly referred to as 'strata housing' in British Columbia – eventually replaced new rental buildings. A condo was the path to home ownership for anyone who couldn't afford a house, but had saved a little money.


"As inequality grew and income gap between owners and renters grew, well, if you have a pool of potential customers with double the income, who are you going to build for?" asks Dr. Hulchanski, a professor of housing and community development in U of T's faculty of social work.


And even though more than half the city rents, purpose-built rentals have become pretty much a unicorn. The vacancy rate is near zero. As part of an effort to address the crisis, the city is considering the creation of designated areas of the city for rental housing only. The city currently doesn't have the authority to create rental-only areas: That authority must come from the province.


It's a potential game changer, says Andy Yan, director of the Simon Fraser University's City Program.

"This rental zoning is the weight-bearing beam for the entire affordable housing strategy," says Mr. Yan, who is also an urban planner.


The idea is part of the new Housing Vancouver Strategy that has been a year in the works, with an ambitious goal to add 72,000 housing units to the city, including 20,000 purpose-built rentals. Nearly half the units will be geared to households with less than $80,000 in annual income. The plan, set to go to council for approval on Nov. 28, includes the creation of rental zones as an idea only. But it's an idea that intrigues Gil Kelley, the city's general manager of planning, urban design and sustainability.


"There could be targeted zones; broad zones. Conceptually, it could be a powerful tool in [dealing with] land price escalation," he said in a joint phone interview with Dan Garrison, assistant director of housing policy.


 "We have been producing rental, but not at the pace we need to, because there's still a lot of production in the permit stream right now that's definitely biased toward strata, that's more profitable. So it's tough for rental in that market. We need to produce much more.

"It's not a war on strata, but about an ability of rental to catch up."


The city has done what it can to incentivize rental development, but it wants greater authority over zoning if it's going to tackle the crisis. A rental-only zone would take away a lot of the hassle for developers interested in purpose-built rental.


"Somebody who's trying to build a rental project wouldn't have to compete with strata condos," Mr. Garrison says.


Mr. Kelley says it wouldn't thwart land speculators entirely, but it could create "more cautious behaviour" on the part of landowners. It's common for landowners in areas rezoned for higher density to ask inflated prices.


That kind of behaviour often forces a developer to build luxury condos in order to get decent returns.


Any blanket rezoning is always a political minefield, which is probably why Mr. Kelley is cautious on the topic.


"It's early days. It's an idea to pursue; it's not fleshed out with a lot of detail because we do need to engage the province and think about where this would land, and where and how it would apply.


"But conceivably, we could overlay a larger geographic area with a rental-only policy. We'd want to be very careful about not creating a rental ghetto over time," he adds. "Part of this has to be thought about in terms of: How do we renew some of this aging rental stock and keep it affordable? We are signalling that this is an important piece to think about in more detail.


"We don't have all the answers. We've mentioned it [to the province]. I would say we are at the very beginning of engagement with this new government. But it's something."


Condos are a major moneymaker for the development community in Vancouver. And yet, some in that community are increasingly seeing a benefit in developing rental.


"The market wasn't there until a few years ago," says Ben Taddei, Vancouver-based Conwest Group's chief operating executive. "The rents weren't high enough. The reason we are talking more about purpose-built rental now really is because the economics have allowed it to happen … people are pushed into the rental market.


"There are other developers who are very bullish on rental. They think rentals are going to go up forever."


Mr. Taddei is a big advocate of rental-only zones. His company recently completed one of the city's first purpose-built rental buildings in decades, Clark Park Apartments at Knight Street and East 15th Avenue. The building is almost completely rented, with one bedrooms starting at $1,595 and two bedrooms at $1,990. However, Mr. Taddei says he couldn't build Clark Park today and offer the same rent. If he did come online today, rents would be higher because building costs have shot up in the past few months.


"I would love to do more rental, but land values don't reflect current construction costs," he says. "And I won't pay what people are asking for their land because I can't make any money – that's the bottom line. Either rents have to move up or land has to come down."


A rental zone is a way to reduce land prices, he argues, because it removes risk for developers. Mr. Taddei sees it playing out the way the city zones exclusively for parks or schools. Without having to apply for a rezoning, and take his project before council, he'd only have to apply for a development permit. That means all he has to worry about is the land value.


"You take the risk out of it, you streamline the process, and standardize the value of the land."


Condo marketer Bob Rennie also embraces the idea of rental zones. His data analyst, Andrew Ramlo, says the company has been looking toward rental zones for some time. He says suitable areas could possibly include False Creek Flats, which is an industrial and educational area along Great Northern Way. He says rental housing would nicely complement the students and workers in the area.


"It would be a fabulous project for the city to carve out an area down there," Mr. Ramlo says. "There aren't a lot of neighbours down there to get mad at them for doing it. There are some logical locations in and around the flats, mostly around the edges, that if anybody proposed for residential uses, it would be fitting to do that. But it's not a conversation I've heard at the city level."


Other areas in the region that would make sense are Metrotown, Brentwood and Lougheed in Burnaby, neighbourhoods that already have a huge number of condos. There are commercial-type uses near transit that could be rezoned, he says.


He also suggests Surrey, which is currently planning and developing the region's second metropolitan hub at Surrey City Centre.


Dr. Hulchanski sees the industry's interest in rental as a sign that they are perhaps growing more cautious.


"It's steady, long term money," Dr. Hulchanski says. "One logic of successful condo developers in favour of rental is that they know that the current game is lemming-like – only condos being built, and a lot of them, and it's not sustainable. They are  going to get caught at some stage – in a big way or a small way, they are going to get burned. By not doing some condos, [the building industry] helps the condo market have some stability."


Given the authority, Dr. Hulchanski says it would be easy enough for the city to simply mandate that any new project in a defined, high-density area is now rental only. The zoning could apply for a given number of years, or be permanent. The point is to introduce fairer rules in an overheated market with a lot of money at stake.


"Give [developers] the opportunity," Dr. Hulchanski says, "because right now, a condo developer – an aggressive one that goes after city councillors … to get their vote for massive rezoning – they make a massive amount of money and keep out other developers who would build something good, but who can't compete with that."


He agrees that some landowners will balk if their properties are rezoned for rental. It's a challenge.


"The land will be worth more if zoned for increased density, period. But yes, the same zoning would most likely be worth a lot more if it was for condos," he says. "Yes, that will be a political issue - zoning always is, and this is a real big one.


"But I think they should consider it, and should be doing it."


Again, Dr. Hulchanski says speculative demand needs to be addressed in concert with adding supply. He is open to a heftier foreign buyer tax and a ban on foreign 


Provided by: Kerry Gold - Special to The Globe and Mail


The BCREA Commercial Leading Indicator (CLI) increased for the ninth consecutive quarter, rising  2 points in the third quarter of 2017 to 135.3. That increase represents a 1.7 per cent rise over the second quarter and a 7.3 per cent increase from one year ago.


The sustained rise in the CLI has been driven by several years of strong growth in the BC economy, particularly in sectors beneficial to commercial real estate activity. While we expect that the almost unprecedented cycle of abovetrend growth in the BC economy will end next year, the overall economic environment remains very supportive of growth in investment, leasing and other commercial real estate activity over the next  two to four quarters.


Growth in the BC economy was propelled higher in the third quarter by continued strength in the retail and wholesale trade sector, as well as rising manufacturing sales. Retail sales are on pace to grow more than 9 per cent this year, the highest growth since 1994 and the fourth consecutive year that retail sales have risen more than 6 per cent.


Employment growth in the provincial economy is at a more than two-decade high, approaching 4 per cent through the first nine months of the year. Key commercial real estate sectors have been prominent among those industries posting job growth. The CLI’s measure of office employment rose by 7,100 jobs in the third quarter, while manufacturing payrolls expanded by 8,400 jobs to their highest level since 2008.


While the economic activity and employment components have propelled the CLI higher, the  financial component has been a modest drag on the index. Rising interest rates, widening credit spreads and a slight decline in the benchmark REIT index translated to slightly less favourable financial conditions for commercial real estate in the third quarter. 


Quarterly Trends by CLI Components


Q3 Highlights:

Economic Activity: Retail sales rose 1.6 per cent on a quarterly basis in the third quarter and were up 11 per cent compared to the third quarter of 2016. Similarly, wholesale trade was up 4 per cent quarterly and 14.5 per cent year-over-year. The manufacturing sector followed up nearly 5 per cent growth in the second quarter with a further 1 per cent increase in the third quarter. Year-over-year, manufacturing shipments were 7 per cent higher in the third quarter.

Employment: The benchmark index for Canadian REITs finished the second quarter down 1.3 per cent, the second consecutive quarterly decline. Short-term credit spreads also widened somewhat in the third quarter. Overall, despite a rise in overall borrowing rates, financial conditions remain accommodative.

Financial: The CLI measure of office employment rose by almost 7,100 jobs in the third quarter of 2017, largely due to a surge of new jobs in the professional services sector. Hiring has also picked up significantly in the BC manufacturing sector, with employment hitting a nearly 10-year high after adding 8,400 jobs on average through the third quarter.


Variation in the Commercial Leading Indicator can be broken out into three distinct components:   » The economic activity component of the CLI follows  the overall trend in BC’s economy and reflects changes  in economic variables shown to lead commercial real  estate activity.  » The employment component reflects changes in the commercial real estate environment, due to changes in  the overall business cycle.  » The financial component acts as an early-warning indicator from financial markets that could signal turning points in the commercial real estate market. 


Commercial Leading Indicator is published quarterly by the British Columbia Real Estate Association. Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: “Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information


The British Columbia Real Estate Association (BCREA) released its 2017 Fourth Quarter Housing Forecast today.

Multiple Listing Service® (MLS®) residential sales in the province are forecast to decline 10.4 per cent to 91,700 units in 2018, after an expected 8.8 per cent decrease this year. A record 112,209 unit sales were recorded in 2016. The ten-year average for MLS® residential sales in BC is 84,700 units. Strong economic and demographic fundamentals are supporting elevated housing demand. However, a number of factors are expected to temper home sales in the province next year.


“Housing demand across the province will face increasing headwinds in 2018,” said Cameron Muir, BCREA Chief Economist. “A rising interest rate environment combined with more stringent mortgage stress tests will reduce household purchasing power and erode housing affordability.” The 5-year qualifying rate is forecast to rise 20 basis points to 5.15 per cent by Q4 2018, and the new qualification rules for conventional mortgages will erode purchasing power by up to 20 per cent. “Given the rapid rise in home prices over the past few years, the effect of these factors will likely be magnified."


The supply of homes for sale is now trending at or near decade lows in most BC regions. The imbalance between supply and demand has been largely responsible for rapidly rising home prices. The combination of weakening consumer demand and a surge in new home completions next year is expected to induce more balanced market conditions, producing less upward pressure on home prices. The average MLS® residential price in the province is forecast to increase 3.1 per cent to $712,300 this year, and a further 4.6 per cent to $745,300 in 2018.

 About BCREA The British Columbia Real Estate Association (BCREA) is the professional association for about 22,000 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.


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Real estate isn’t just a place to live anymore, it’s now an integral part of your financial plan. But that doesn’t mean you should get in at all cost. To make it work, you need to consider the purchase of a home as part of your overall financial plan. To help you stay on track, here are eight simple steps you can take to start the home-buying process in a fiscally responsible way.


1. Start budgeting

Most people start their home buying process by going to an open house or by going online to the Multiple Listing Service— a collection of private databases used by real estate brokers to list homes for sale. But if you’re serious about becoming a homeowner, the first place to start is with your financial budget.

If you haven’t already make a list of all your known monthly and annual expenses. Now compare that to the income you take in. Any money left over should now be used to further your home purchase plans. If you don’t have money left over you either need to reconsider what you currently spend your money on or honestly ask yourself if you can afford home ownership.

2. Pay down your debt

Do you carry outstanding debt, like a student or car loan or even a balance on a credit card? You need to start reducing this money owed. Why? Because lenders don’t like to give mortgages to people who don’t manage their debt. This doesn’t mean you have to be debt-free to buy a home, but it does mean you that what you owe is less than what you earn. For most mortgage lenders, this equation is determined by debt ratios. These ratios compare your minimum monthly debt payments to your gross monthly income. If these payments are over a specific threshold—between 32% and 40% in Canada—you won’t qualify for a standard mortgage. (For more on how debt ratios are used, go here.)

3. Start saving

Almost every lender wants a buyer to have skin in the game—this translates into the equity you have in the home, which is determined by how much money you put down when you buy the home.

To put money down, you must save up money, but this doesn’t mean cramming cash under your mattress. Use money you’ve already saved in your RRSP through the federal Home Buyers’ Plan. (For information on how this works, go here.) Family can also give you a loan (although this could impact how much mortgage you get, as it becomes part of your debt) or a cash gift. You could also redo your budget, cutting out some expenses and then using the money as part of your home-buying savings plan, or take on extra work to earn a bit more money.

4. Build up your score

When it comes to borrowing money, credit is king. Your creditworthiness is measured using your credit score—the historical tally of how responsible you’ve been as a credit consumer.

The key to a strong credit score is to be consistent about paying your bills. This doesn’t mean letting one bill become overdue as you pay another off. It means paying at least the minimum monthly payment for each credit card and personal loan where you have a balance. Consider every late payment as a mark against your credit rating. A low score can actually prevent you from buying a home as you may not qualify for a mortgage, or you’ll get dinged with a much higher mortgage rate.

If you’re starting from scratch, consider applying for a pre-paid credit card. Then use it and pay it off each month. The key is not to max-out the card but to consistently use and pay off the balance. It’s about showing how responsible you are with the credit, not how many bills you can rack up. When you’ve got a strong enough credit score, apply for a credit card or two. With two credit cards used and paid off every month, you’ll build a strong credit score in no time.

5. Know your score

Now that you’re building your credit, you’ll want to confirm that your credit report is accurate.

In Canada, there are two companies that collect and distribute credit reports: Transunion and Equifax. Both allow you to access your credit report for free, but you can only request this report once per year and the request has to be made in writing. (For the Equifax request form, go here. For the Transunion request form, go here. Keep in mind Transunion also distributes this free report if you visit one of their offices in person or call.)

Once you have it, carefully read your credit report. All loans, credit cards and payments should be listed—and you need to make sure the information is accurate. If there are errors, you’ll need to file a dispute with the credit rating agency. (For Equifax, go here. For Transunion, go here.)

6. Talk to a mortgage professional

Now, it’s time to talk to a mortgage professional. This preliminary talk is also called the “pre-approval” process—it enables you to determine roughly how much mortgage you can qualify for, based on the information you provide. Remember, though, junk in is junk out. The more accurate you are with your information, the more precise the pre-approved mortgage will be.

READ: Documents required to get the best mortgage rate »

Also, in this day and age of connectivity, this “talk” with a mortgage professional can also be done through online requests or forms and through various banks and broker websites.

Keep in mind, that mortgage agents work solely for the bank that employ them, while brokers are independent and represent a number of different lenders. Regardless of who you choose to work with you won’t end up paying this person directly—the lender pays the agent or broker once a deal is finalized.

7. Figure out what you can afford

It’s important to remember that buying a home is only one part of a larger financial plan. For that reason it’s important to buy a home based on your own budget, not on the maximum loan you can borrow.

Use online calculators, like Karl’s Mortgage Calculator, to run your own numbers. Consider what will happen in five years should interest rates go up; how do extra payments help? By running your own numbers and sticking to your own budget, your home purchase can become a pillar that helps hold up your overall financial plan, rather than an anchor that can pull it down.

MORE: Costs to expect when buying and selling a home »

8. Talk to a realtor

Now that you know what you can realistically afford, it’s time to go house-hunting. A good way is to employ the services of a licensed real estate agent. These are professionals who make it their business to know the market and neighbourhood details. To find a realtor, talk to friends, family and colleagues. Interview at least three before choosing someone to work with.

ALSO: 9 mistakes first-time homebuyers make »

Of course, you’re not bound to work with a realtor. However, if you do decide to go without an agent, make sure you educate yourself on the home buying process and make sure you find a good lawyer that specializes in your type of home purchase (a condo lawyer, if you’re buying a condo, a lawyer with co-op experience if buying a co-op, etc.).

At this point it may take days, weeks, months or even years before you find the right home for you. Don’t despair. Remember that while the purchase price of your home and the mortgage rate you secure are important, so are the details leading up to buying a home. By employing these steps, you can prepare yourself to buy a home without holding your own financial plan ransom.

Provided by: Romana King with Money Sense


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The Globe and Mail

Condos in the Gilmore area of Burnaby are seen in the distance behind houses in east Vancouver, B.C.

DARRYL DYCK/The Globe and Mail


In Vancouver, the detached house owner is often vilified. So too, is the resident who protests density.


They are vilified by what one academic is calling "the housing supply myth," which is the belief that we need more housing in order to lower costs. It's an argument commonly used by politicians, industry, and some academics and citizen activists.


"There is an intuitive appeal to that argument," says Dr. John Rose, who spent the last year on education leave, researching the popular belief that Vancouver has a lack of housing supply. "We understand this idea of supply and demand, intuitively, even if you haven't taken an economics course."

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However, he has concluded that Vancouver does not have a shortage of housing units. In fact, we have a surplus. And, as anybody in Metro Vancouver knows, prices have not plummeted as a result.


"If we are looking back at the last 15 to 20 years, we have been providing more than enough units of housing – and it's still unaffordable.


"And yet, you see this argument being thrown out there by various quarters, that we have this housing shortage."


Dr. Rose is an instructor in the department of geography and environment at Kwantlen Polytechnic University. He's been teaching there since 2002. He calls his report The Housing Supply Myth, based on data from the Statistics Canada censuses and the Demographia Survey House Price Data. He also looked at supply in housing markets elsewhere in Canada, the United States and Australia.


"As a resident of Metro Vancouver and observing all this construction around me, I thought: 'How do we have a housing shortage?' Maybe I'm missing something, but this doesn't seem to stick. And this data supports that idea."


In order to ensure his findings weren't just a blip, Dr. Rose went back to the 2001 census, covering a 15-year span. He found that for each household added during this period, the region added 1.19 net units of housing. Put another way, for every 100 households that came along, Metro Vancouver added 119 net units of housing. According to census data, there are also 66,719 unoccupied dwellings in Metro Vancouver.


And despite a surplus of housing stock, affordability has significantly worsened – a contradiction to the supply mantra.


"It's quite the surplus," he says. "I should also note that Vancouver's ratio was the fifth highest of all 33 census metropolitan areas examined during this period – at the same time as its housing prices escalated far beyond the other markets.


"We would think that if a market got less affordable, maybe that meant supply was getting tighter and tighter. But that's baloney. That's garbage," he says. "So my answer to the supply argument is that it's tenuous for all the markets, because you can basically see no relationship – and this is over a 15-year period.


"Here we've had more than enough supply and yet the housing costs have gone crazy."


It's important that people understand the true nature of the affordability problem so we can take significant action to correct it, says Dr. Rose. He favours taxes on speculation, and doesn't rule out a ban on foreign buying of existing properties, as New Zealand is implementing next year. He also questions the building of housing units that are overpriced and intended for speculation, and therefore "pointless."


And he's not a man without "skin in the game."


"I am doing research that would, if acted upon, significantly degrade the value of my property, and I think to myself, 'if I sell it now maybe I could retire earlier.' So the self-interested side of me would say, 'don't interrupt the party.' The good side says, 'no, for this situation to get reined in, something more dramatic is necessary.'"

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The supply argument also targets residents who are more community-minded than concerned with housing units. Whether it's people trying to fight density in Chinatown, Marpole or Grandview-Woodland, they're routinely painted as selfish NIMBYs who are to blame for high prices.


Josh Gordon, assistant professor at Simon Fraser University's School of Public Policy, has regularly spoken out against the more-supply argument.


"There's simply no evidence of a slowdown in construction or supply," says Dr. Gordon. "The construction industry in Vancouver is operating at full throttle. There  are around 40,000 units under construction, which is twice the historical average for the post-2000 period. The idea that we should get more supply into the pipeline is a bit silly.


"The role of the supply argument is, to a large extent, to distract the public and policy makers from action on the demand side, specifically in terms of foreign capital."


Dr. Rose says the pro-supply camps tend to be divided into those who blame land use constraints, such as the Agricultural Land Reserve (ALR), as limiting outward expansion, and those that argue for upward density, such as towers. Both camps blame government regulations on stifling development and consequently standing in the way of affordable housing.


Demographia, which puts out the Housing Affordability Survey of cities each year, attributes high prices to constraints such as the ALR. In the other camp is industry spokesman and condo marketer Bob Rennie, who has said: "If you have a 'no tower' sign on your front lawn, you have no right to speak to your children about affordability … We can't have low density and low prices … We just don't have the supply."


"What they're implicating is citizen resistance," says Dr. Rose. "Bob Rennie is very aware he's advancing an argument that benefits him economically. He acknowledges that. But it's interesting that it's an argument picked up by generally well-meaning academics that support the idea of smart growth. I'm sympathetic to that, too. But I'm leery of attributing our high housing costs and the escalation we've seen over the last 15 years to an inadequate densification."


University of B.C. sociology professor, Dr. Nathanael Lauster, who wrote the book, The Death and Life of the Single-Family House, advocates for greater density. He sees the single-family house as an oppressive housing type designed to exclude low-income people.


"I think both demand and supply policies, all these things are working together. But I do think insofar as we have a lot of land locked up, reserved only for millionaires, I think expanding into that land, and enabling more diverse housing options would enable more affordability."


There are supplyists who are notoriously confrontational, particularly on social media, and Dr. Rose knows that his findings will be challenged.


"Bring it," he says. "Here's the data. If you want to argue against it, go ahead. It's publicly available. And when I did this research, I had my independence. Nobody owns this. I get no sponsorship from any industry, any sector. I'm a free agent.


"I think that's a benefit of this research. It's not coming from a school of business that is being funded by the real estate industry, or somebody who's passionate about densification and smart growth. I think there's some romanticizing going on, about what the ideal city should look like, and unfortunately it gets sucked into this debate about affordability.


"I'm just saying look at the numbers, and we see Vancouver has plenty of supply.


"And can we build ourselves out of this? Not in this current model."


Provided by: Kerry Gold with the Globe & Mail


The British Columbia Real Estate Association (BCREA) reports that a total of 8,677 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in October, an increase of 19.3 per cent from the same period last year. Total sales dollar volume was $6.25 billion, up 41.6 per cent from October 2016. The average MLS® residential price in the province was $720,129, up 18.7 per cent from October 2016.

“BC home sales trended higher in October, up 23 per cent from January on a seasonally adjusted basis,” said Cameron Muir, BCREA Chief Economist. “A lack of supply in the resale market continues to put upward pressure on home prices in most BC regions.”

Total active listings were down 5.1 per cent to 27,987 units in October compared to the same month last year, and have declined 49 per cent over the last five years. The ratio of home sales to active listings was up from 24.7 per cent in October 2016 to 31 per cent last month. The BC housing market is considered to be in relative balance when the ratio of home sales to active listings is between 12 and 20 per cent.

Year to date, BC residential sales dollar volume was down 9.4 per cent to $63.8 billion, when compared with the same period in 2016. Residential unit sales declined 10.7 per cent to 90,290 units, while the average MLS® residential price increased 1.4 per cent to $706,881.


BCREA is the professional association for about 22,000 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.


The purchase price you negotiate when buying or selling a home is just one part of the ultimate cost for a home. In addition to the purchase price there are a number of other fees—known as closing fees—that need to be factored in to any purchase or sale price. To help you plan the purchase or sale of your property, here’s a snapshot of the extra fees you can expect to pay out of pocket once you’ve settled on the home sale price.

Buyer’s Closing Costs

→ Land Transfer Tax

Most provinces and some major cities impose a land transfer tax that is calculated as a percentage of the home’s purchase price. The formula varies from province to province (and from city to city) so it’s best to use an online calculator. For this example, we’ll assume the purchase of a $350,000 home in Toronto, Ontario. Based on the calculator, a buyer would have to pay a provincial and a city land transfer tax that equates to $6,950. If, however, you were a first-time home buyer, you’d get $5,225 in rebates on those fees.

→ Mortgage Costs

Most banks won’t charge a fee to set-up a mortgage or to do a mortgage-related appraisal, but some still do. If your bank does charge you, expect to pay between $250 and $500 for a mortgage-related appraisal. Also, if you’re putting less than 20% down on the home you’re buying, you will need to pay mortgage default insurance—and the less money you use to purchase the home, the more money you’ll be charged in default insurance fees. To help you calculate here is the sliding scale fee charged by Canada Mortgage Housing Corporation and Genworth—the two largest mortgage default loan insurance providers.

80% to 85% of purchase price: 1.80% of mortgage + PST
85% to 90% of purchase price: 2.40% of mortgage + PST
90% to 95% of purchase price: 3.60% of mortgage + PST

over 95%: 3.85% of purchase price + PST

Keep in mind, too, that mortgage default insurance fees will also be charged on amortization that is longer than 25 years, even if you put more than 20% down on a home. According to one mortgage broker, for every extra five years (above 25 year amortization), the premium increases by 0.2%. Also, some high-risk borrowers, such as self-employed or those with large debt loads, may end up being charged a mortgage broker fee—a finder’s fee that can add an extra $1,000 up to $9,000 on your mortgage closing costs.

 → Adjustment Costs

Once a sale is finalized, your lawyer will need to calculate the adjustment costs. These are costs the seller prepaid and can include property taxes, utility bills, heating oil, lawn care or property maintenance services as well as other annual contracts. For metered services, such as hydro, gas or water, the meters are read on closing day (the day the house changes ownership), to verify down to the last cent what the seller and buyer owes. For other annual charges, an adjustment—which looks like a credit—is given to the seller, meaning they will get reimbursed for the expenses they have already paid to maintain the home.

→ Home Insurance

If you’re buying a home and getting a mortgage, you will be required to get home insurance coverage. While the cost varies widely depending on the home you buy, where it’s located and the type of coverage you require, expect to pay at least $800 per year for coverage.

→ Legal Costs

A lawyer will do a series of searches and generate a slew of documents when processing a home sale transaction. This includes: a title search (which verifies that a seller legally owns the property and searches utility and tax departments to make sure there are no liens against the property), registering the title deed and mortgage, where applicable septic tank and potable water searches. In most cases, lawyers will charge anywhere from $500 to $1,500 for this portion of the work. But on top of these fees there are also disbursement costs, fax/phone and mail costs and other costs of doing business.  

→ Title Insurance

While title insurance is not mandatory it is a very good idea. It protects you against mortgage fraud, identity theft and forgery and can protect you against fees and costs that were not caught in the searches your lawyer conducted prior to the sale (and this happens!). The typical cost is about $300 on a $500,000 home.  

Seller’s Closing Costs

→ Realtor’s Commission

The biggest fee sellers will have to pay are the commission fees of the realtors involved with the sale of the property. Generally speaking, the total commission cost is 5%—2.5% for each agent (although, this split is different in the province of B.C.). That said, you can always try and negotiate a lower commission rate, but this needs to be agreed upon prior to the listing and sale of your home. Remember, too, that GST is added to these fees.

→ Lawyer’s Fees

You will need a lawyer to discharge the title for the property and the mortgage and to verify that all prepaid expenses are returned to you and that utility and other services are up to date in payments. Expect to pay $500 to $1,500 for an uncomplicated transaction (although, most lawyers charge less for a sale than a purchase), plus disbursements.

→ Mortgage Discharge

If you ended your mortgage—known as a “closed” mortgage—before you mortgage matures you will need to pay penalties and discharge fees. For a variable rate mortgage, the penalties equate to three months worth of mortgage payments, plus a discharge fee of $200 to $600, depending on the lender. For a fixed rate mortgage, the penalties can be much, much higher so it’s a good idea to call your lender and ask what you will need to pay to break your mortgage. Keep in mind, if you’re looking at a high penalty to break your mortgage you may be able to transfer it to a new property for a significantly smaller fee.

Provided by: Romana King with Money Sense


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The trend in housing starts was 216,770 units in October 2017, compared to 215,153 units in September 2017, according to Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.


”The trend in housing starts essentially held steady in October following a decrease in September,” said Bob Dugan, CMHC’s chief economist. ”Nevertheless, new home construction remains very strong in 2017, as the seasonally adjusted number of starts has been above 200,000 units in nine of ten months so far this year.”

Monthly Highlights

New Brunswick

After four years of declining construction activity, population growth has helped push New Brunswick’s housing starts up 28% year-to-date. Starts have been strong across the province, with much of the activity concentrated in the Moncton Census Metropolitan Area (CMA). Multifamily starts have been particularly strong in the hub city, up 49% year-to-date.


In the Montréal area, this past month saw the highest level ever recorded of residential construction for the month of October, with close to 3,500 housing units started—half of them on the Island of Montréal. Once again in 2017, condominium and rental housing construction has driven the growth. The decrease in inventories of completed and unsold condominiums and the low vacancy rates in newer rental buildings seem to have prompted developers to ramp up on construction projects this year.


Low-rise housing starts trended higher in October supported by improved employment and earnings this year. This increase was just enough to offset the effect of the sharp decline in apartment starts this month. To October, housing starts were 27% higher than their level in 2016. The rise in starts so far this year was mostly driven by a doubling in apartment starts following three years of declining high-rise construction in the CMA as the number of completed and unsold condominiums has trended down considerably since peaking in mid-2016.

Thunder Bay

October housing starts in Thunder Bay trended at their highest level in three years due primarily to a continued increase in the trend for multiples starts. Downsizing senior households, international post-secondary students and in-migrants to the CMA drawn in by an improving service sector have all been supportive of apartment starts this year. Conversely, the trend for single detached starts has remained mostly flat owing to more affordable alternatives in the resale market.


Total housing starts in the CMA trended lower in October 2017, with the most pronounced declines occurring in single-detached home and apartment starts. Lower trending single-detached home starts are reflective of fewer sales of pre-construction units through 2016 and spring of 2017. Sales of pre-construction condominium apartment units have been brisk over the past couple of years and these units continue to start construction with varying levels of intensity each month.


Total housing starts in the London CMA were down significantly in October 2017 compared to October 2016, due to a high number of apartments started last October. However, single-detached starts in London CMA posted the highest levels for the month of October since 2007. Strong population growth and a low supply of resale home listings have strengthened demand for new single-detached homes – encouraging builders to continue to keep single-detached starts elevated over recent months.


Multi-unit housing starts in the Windsor CMA posted the highest levels for the month of October since 2004, while single-detached starts trended lower for a second consecutive month. Slightly lower demand in the resale market evidenced by a declining sales-to-new listings ratio has discouraged builders from keeping single-detached starts as high as they were early in the summer. Also, Windsor’s growing population of seniors has strengthened demand for multi-unit starts, as seniors have a higher propensity to downsize to apartment units and semi-detached homes as they age.


While labour market conditions and housing demand have improved this year, the trend in total housing starts has been slowing down over the last couple of months. A rise in active listings in the competing resale market combined with elevated inventories in the new home market, especially for apartments, have impacted new home construction. Despite the decline in the trend, total actual housing starts to the end of October were still up 24% compared to the same period a year earlier.


Starts trended higher in the Vancouver CMA in October, with seasonally adjusted monthly starts reaching a 12-month high. The increase was primarily driven by a significant uptick in condominium apartment starts in Burnaby, Coquitlam and Surrey, where the demand is strong for more affordable multi-family dwellings. Year-to-date starts remain below 2016 levels, mostly due to fewer projects getting underway in the City of Vancouver and on the North Shore this year.


CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in monthly estimates and obtain a more complete picture of Canada’s housing market. In some situations analyzing only SAAR data can be misleading, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.


The standalone monthly SAAR of housing starts for all areas in Canada was 222,771 units in October, up from 219,293 units in September. The SAAR of urban starts increased by 2.5 per cent in October to 205,935 units.


Multiple urban starts increased by 12.5 per cent to 149,593 units in October. Single-detached urban starts decreased by 17.1 per cent, to 56,342 units.


Rural starts were estimated at a seasonally adjusted annual rate of 16,836 units.


Preliminary Housing Start Data in Centres 10,000 Population and Over



All Others


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Oct. 2017


Oct. 2016

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Preliminary Housing Starts data are also available in English and French through our website and through CMHC’s Housing Market Information Portal. Our analysts are also available to provide further insight into their respective markets.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need, and offers objective housing research and information to Canadian governments, consumers and the housing industry.

Reciprocity Logo The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Greater Vancouver REALTORS® (GVR), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the GVR, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the GVR, the FVREB or the CADREB.