Bank of Canada - Interest Rates

Bank of Canada Governor Stephen Poloz stated he was in no rush to resume monetary tightening, saying while interest rates needed to move up into a neutral range, over time the path back was now “highly uncertain.”

The overnight rate is currently 1.75 percent, well below the bottom end of what the Bank of Canada considers to be a neutral range of 2.50 percent to 3.50 percent, where policy is no longer stimulative.

The last increase was October 24th 2018 when the Bank of Canada raised the overnight rate from 1.5 per cent to 1.75 per cent.


Source: https://www.bankofcanada.ca/2019/03/fad-press-release-2019-03-06 PIC Stephen Poloz

Income and House Prices

Sal Guatieri, senior economist at BMO Capital Markets, says incomes in many regions of the country are likely to rise faster than house prices. That follows many years of property prices outstripping income gains by many multiples. While that means a slow rise in equity gains, the good news is more Canadians will be able to buy into the housing market.

First Time Home Buyer Incentive

The 2019 federal budget announcement included $1.25 billion over three years for “shared equity mortgage” with first-time home buyers. That means Canada Mortgage and Housing Corporation (CMHC) could contribute up to 10 per cent of the purchase price of a home in what will essentially be an interest free loan that does not need to be paid back until years later – possibly when the home sells. There are still more details to come and questions to be answered, but here are a few of the qualifying requirements we know about:

• Applicants must have a household income of less than $120,000 per year.
• Applicants must be able to come up with a five per cent down payment.
• The program caps out at four times the applicant's annual income, which means it can only help homeowners looking to buy properties where the mortgage value plus the CMHC loan don't exceed $480,000.

This Initiative could save first-time home buyers a considerable amount of money. For example, if a first-time buyer wants to get a home that costs $400,000, they have to come up with a $20,000 down payment, then they'd normally have to take out a loan for $380,000 to cover the rest of the purchase price. However, under the new program, CMHC could kick in up to $40,000 toward the purchase price, in exchange for up to a 10 per cent stake in the home. That brings the buyer's mortgage down to $340,000. On a standard mortgage at 3.5 per cent interest, that translates into a monthly mortgage payment that is $200 lower than it would have been for the 25-year life of the loan. That's more than $2,700 a year in potential savings; a significant amount of money for households that are just starting out in their careers and growing their families.

Reference: https://www.cbc.ca/news/business/budget-cmhc-home-buyers-1.5063204

Reference: https://www.timescolonist.com/business/easing-mortgage-stress-test-better-for-first-time-buyers-critics-1.23670358

Second Casino in Greater Victoria

View Royal is home to the region’s only casino, Elements Casino. However, BC Lottery Corp. would like to place a second casino in Greater Victoria. Saanich is vying to be included in the next round of casino talks after Victoria turned it down. Saanich would only consider a casino with amenities such as a hotel or entertainment centre with about 1,200 seats and is interested in revenues that would reduce the tax pressure on residences and businesses.

Source: https://www.timescolonist.com/news/local/saanich-wants-to-be-a-player-in-next-round-of-casino-talks-1.23661699

Property Renovations

There is a lot less cash being borrowed for property renovations compared with recent all-time peaks according to the Bank of Canada.

A recent peak of $3.61 billion was hit in 2nd Quarter of 2016, and the most recent quarter is down 17.79% from there. The balance is also down 42.25% from the all-time high peak of $5.14 billion hit in 3rd Quarter of 2009.

SOURCE: https://betterdwelling.com/flip-or-flop-canadian-real-estate-renovation-loans-down-over-40-from-peak

Building Inspectors

Building inspectors are the unsung heroes and heroines providing vital quality assurance in construction. They also have some memorable adventures while providing this essential service. “Building Inspector Memories” by Tom S. North provides a fun and interesting look at the industry.


Source: https://www.mayerthorpefreelancer.com/entertainment/books/book-review-building-inspectors-memoir-provides-an-insider-look-at-the-b-c-property-industry/wcm/fce71259-2325-4d3d-b6fe-bf2f00d87658 

Who is paying more taxes?

According to a study of Statistics Canada data by CMHC, the share of the province’s homes owned purely by overseas residents was found to increase dramatically among newer properties, rising to a peak of nearly nine per cent built in the frenzied 2016/2017 market.

CMHC also found that the median value of homes owned by non-residents in Metro Vancouver and across B.C. was higher than the median value of homes owned by Canadian residents. The non-resident-owned median assessment value of a single-family house in British Columbia was $236,000, or 36.7 per cent, higher than the median-valued resident-owned detached house in B.C.

Source: https://www.westerninvestor.com/news/opinion/weekly-buzz-foreign-home-ownership-price-drops-1.23664980

What Women Should Know at Tax Time

The tax system wasn't built with women in mind, but there are still many useful tax breaks for people in social roles dominated by women. Here are some useful pointers by Huffington Post’s Daniel Tencer.

• If you have kids, make sure you file for the Canada Child Benefit, one of the most generous such benefits in the developed world.
• Many medical expenses can be deducted.
• Apply for the Canada Caregiver Credit if that applies to your situation.
• If you are a single parent, don’t forgo child support; You don’t pay taxes on it.
• Max out your TFSA before you RRSP, especially if you are a lower income earner.
• If you expect to live long in retirement, consider delaying on collecting CPP and OAS.

Source: https://www.huffingtonpost.ca/2019/03/15/women-tax-fiiling-canada_a_23693324/?utm_hp_ref=ca-business

New Homes in Victoria

Canada Mortgage and Housing Corporation reported there were 572 new homes started through the first two months of the year, an increase from the 411 started through February 2018. But there are signs the sector is slowing down according to the VICTORIA RESIDENTIAL HOMEBUILDERS ASSOCIATION which is predicting fewer starts this year. Last year saw 4,273 starts recorded last year, and the number of housing starts in the past couple of years rival numbers last seen in 1976 with 4,439 starts. Across the province, there were 40,000 starts last year, down from the 43,600 starts in 2017. The Province is predicting there will be 34,000 starts this year and 31,800 in 2020. 

Source: Times Colonist

Non-resident Properties in Greater Victoria

Canada Mortgage and Housing Corporation (CMHC) provided insight into the percentage of non-resident properties in Greater Victoria. A property is considered non-resident when it is owned by, or partly owned by people who are non-residents, those being people who don’t live or work in Canada. In Greater Victoria, 5.2 per cent of homes have at least one person on title who are not considered a resident with 2.9 per cent of households being non-residents only and 2.3 per cent are a mix of residents and non-residents. For comparison, the Provincial average is 6.3 per cent and Metro Vancouver leads all BC cities at 7.6 per cent. Interestingly, CMHC found non-resident owners tend to buy newer properties and tend to have higher assessment values.
Source: vancouverisland.ctvnews.ca

Tillicum Mall Changes Ownership

“This is an excellent acquisition for us,” said Kevin Leon, president of Crestpoint. “Greater Victoria has emerges as one of the most desireable markets in Canada due to its growing population, diversified regional economy and strong fundamentals in the commercial real estate market.” Crestpoint Real Estate Investments Ltd. Partnered with Anthem Properties Group Ltd. To purchase Tillicum Centre from Riocan Real Estate Investment Trust. 

Source: https://www.westerninvestor.com/done-deals/done-deals-highlights-march-2019-issue-1.23650314

Affordable Housing

“B.C. boasts Canada's strongest economy and lowest jobless rate, but growth is threatened by a shortage of affordable housing for workers and their families,” says Premier John Horgan. Mayor Lisa Helps said a recent regional study concluded the Victoria area will need 34,000 more rental units by 2038.Catherine Holt, the chamber's chief executive officer, said she agreed with Horgan about the housing problem, adding that the Victoria area needs affordable housing for workers bypassing good jobs because they can't find places to live. Last year, the province promised to invest $7 billion in a decade-long affordable housing strategy. 

Source: https://www.timescolonist.com/b-c-premier-says-affordable-housing-crunch-hurts-province-s-growth-1.23646641

Report from the BC Real Estate Association

A new report from the BC Real Estate Association states home sales in Greater Victoria and across Vancouver Island will keep falling in 2019 while prices will rise slightly. Greater Victoria sales dropped significantly as well, by 20 per cent, to 6,770 last year. The number of properties sold across the province fell by 24.5 per cent last year for a total of 78,345 sales. “The negative shock to affordability and purchasing power created by the ... stress test on mortgage borrowers is expected to continue constraining housing demand in the province this year,” Cameron Muir, chief economist for the B.C. Real Estate Association, said in the first-quarter report.

Source: https://www.timescolonist.com/real-estate/real-estate-forecast-expect-fewer-sales-prices-to-inch-higher-1.23646899

Tech Leading the Way

The tech industry has a strong foothold in Canada, and that is becoming an important economic driver. An economic impact study commissioned by VIATEC Victoria revealed the tech sector has a $5.22-billion annual economic impact on our region, with combined annual revenue of its 955 companies of $4.06 billion and employing 16,775 people directly. It is expected the sector will achieve combined annual revenues of $10 billion by 2030.

Vancouver has 68,500 tech jobs, up 30.7 per cent from 2012, and 5.9 per cent of the city’s workers are employed in the tech sector.

Source: https://www.timescolonist.com/business/greater-victoria-s-tech-sector-still-booming-but-recruiting-a-challenge-1.23462806 
Source: https://renx.ca/tech-likely-canada-saviour-during-recession-morassutti

Current Inventory

We Realtors® are busy showing listings and demand is evident in the greater Victoria area. Currently, we still have very low inventory compared to the long-term average, and little new inventory came into the market this past month.

As spring weather thaws the rest of our snow and flowers begin to blossom, more listings will come onto the market and there will be more available for prospective buyers.

If you’re thinking of listing your home, now is a great time call me. Let’s discuss your goals and decide how to navigate the market.

BC Economic Growth

The province is coming off tremendous economic growth fueled largely by demand for real estate. The provincial economy charted at an average of 3.2 per cent between 2014 and 2017. The booming real estate market benefited everything from the construction industry to the banks. Both Ottawa and Victoria have introduced measures, such as a mortgage stress test and a foreign buyer tax, respectively, to cool the market, and they are taking effect. The Victoria Real Estate Board published January statistics of 329 properties sold, which is down 23.7 per cent from last year. In February, a total of 421 properties sold, which is 22.8 per cent fewer than the 545 properties sold in February 2018. Between January and February, there was a 28 per cent increase in sales, which is to be expected as we approach the spring market.

Source: https://www.vreb.org/current-statistics

Demand for Housing Slowly Rising

A report from BCREA said that the slow market has seen a rise in the number of homes for sale, which will keep prices flat. Cameron Muir, BCREA Chief Economist, said, “The negative shock to affordability and purchasing power created by the B20 stress test on mortgage borrowers is expected to continue constraining housing demand in the province this year, however, favourable demographics along with continuing strong performance of the BC economy is expected to underpin housing demand over the next two years.” In other words, the average annual residential price is forecast to remain essentially unchanged.

Source: https://www.vancourier.com/real-estate/b-c-home-sales-to-creep-back-up-over-next-two-years-bcrea-1.23644991

Victoria Cycling Network

Transit: Victoria Council has decided to fast track the city’s cycling network to complete 32 kilometres within three years. The first leg of the cycling network, a protected, two-way bike lane on Pandora Avenue between Cook and Wharf streets, was completed April 2017, at a cost of $3.4 million.

The second leg, on Fort Street between Cook and Wharf was completed last May at a cost of $3.27 million. Construction will soon start on a separated bike lane on Wharf Street between Pandora and Humboldt streets at an estimated cost of $4.02 million.

BC Budget February 2019

Carol James released the budget on Tuesday, February 19th. Capital spending in Greater Victoria includes the 600-student expansion of Colwood’s Royal Bay Secondary by September of 2020, about $200 million for student housing at the University of Victoria by 2024 and $64 million for the new health sciences centre at Camosun College.

The announcement of 1,750 units of housing for Indigenous people across B.C. includes a 120-plus-unit project in the West Shore. There’s still $18-million worth of work left on the $85-million McKenzie interchange, which is due to be completed by late fall.

Housing Slowdown

“This is the first housing slowdown that was government induced,” says Peter Kinch “There has been a lot of talk about affordability in our market, so both at the federal level and provincial level, they are looking for ways to deal with this lack of affordability in the housing market.”

The Federal government came in with a two per cent stress test and new mortgage rules, with the BC Provincial government introduced the Foreign Buyer’s Tax and the Speculation and Vacancy Tax. “That has had a bigger impact than anything we’ve seen in years,” says Kinch.

Source: globalnews.ca / bc housing recession report