Low Interest Rates Not Having the Same Impact

The Bank of Canada held its key interest rate steady at 0.25 per cent last Wednesday. While the overnight rate has shed 150 basis points (bps), bank notes 5-year mortgage rates only declined 17 bps from the beginning of the pandemic. Lenders have not brought the rates down further because many feel they have a higher risk and lower reward with higher home prices and low mortgage rates.

Until the economy fully gets back on its feet, the absence of rate hikes means variable mortgage rates will remain low, and anyone with a variable rate can expect prime to remain unchanged. Fixed rates will stay near historic lows.

Note: One basis point is equivalent to 0.01% (1/100th of a percent).

Reviewing CMHC’s New Lending Criteri

The Canada Mortgage and Housing Corporation (CMHC) is tightening its lending standards, making it tougher for Canadians, especially first-time home buyers, to borrow money to purchase a home.

As of July 1st, at least one applicant must have a credit score of 680, an increase from the current score of 600.

The gross and total debt servicing ratio will move to 35% (from 39%) and 42% (from 44%) respectively. The gross debt service (GDS) ratio, also referred to as the housing expense ratio is the proportion of income going towards housing related debt, while the total debt service (TDS) ratio adds in all other consumer loans such as credit cards and auto loans in the ratio.

CMHC is also barring “non-traditional sources of down payment or unsecured lines of credit that increase indebtedness.” This refers to a practice of someone using an existing line of credit or other lending sources to come up with the down payment.

Does this mean a grandparent who wants to take out a small mortgage on their own property to help finance their grandchild's down payment no longer allowed? When asked, Beverly LePage, account representative with CMHC replied, “The situation you are describing would be gifted funds for down payment, which continues to be recognized by CMHC has a traditional down payment source by CMHC.”

Greater Victoria Neighbourhoods – Westhills

The Westhills area along the southwest shoreline of Langford Lake is well known for a massive construction project by the same name which to date has built more than 3000 new homes since its inception in 2008.

The developers and builders - The Westhills Land Corp. and Keycorp Consulting - are committed to constructing environment-friendly, energy-efficient residences to BUILT GREEN® standards. They are even using geothermal equipment to aid home heating and cooling.

The community is made up of condominiums, duplexes, single-family homes, and high rises. Two retail centres and sports fields provide a wide variety of amenities and attract local teams for the neighbourhood to enjoy. Close by, Langford Parkway features community amenities such as hockey, soccer, rugby, bowling, mini golf, indoor playground, roller skating, roller skating and more. The YMCA’s new facilities features swimming, weight rooms, gyms, dance floors and a variety of community programs.

A new Belmont Secondary School supporting 1,200 students opened on September 8, 2015 which supports wide range of programs, including expanded students' skills and trades training. Additional programs include global and intercultural skills, French immersion and even robotics.

Westhills has already attracted hundreds of young families due to its beautiful, west coast suburban environment, amazing community amenities within the bustling Langford lifestyle.

How will Canada’s residential and commercial property fare in a post-production world?

Housing prices are just like wages. They are “sticky”, which means, like wages, you will rarely see a large drop in the market pricing. You really cannot draw a straight line from the slowdown in sales to lower home prices because it doesn’t work that way. As well, less listings on the market offsets the slower sales because there are fewer homes for buyers to choose from.

If you enjoy podcasts, listen to Financial Post columnist and Ryerson University real estate management professor Murtaza Haider as he assesses the pandemic’s impact on housing and rental prices, how the shift to working from home could affect real estate in downtown cores and a rethinking of the suburbs on “Down to Business”.

Update on Canada Emergency Commercial Rent Assistance Program

The Canada Mortgage and Housing Corporation published more information on the Canada Emergency Commercial Rent Assistance Program (“CECRA”). Highlights include:

• Commercial Rent Landlords must have declared rental income on their tax returns for 2018 and/or 2019 to qualify.
• Landlords must apply before the deadline of August 31, 2020. 
• The Government loans are forgivable if the landlord complies with all applicable program terms and conditions
• Landlords cannot seek to recover rent abatement amounts after the Program is over
• The Government loans to the landlord will cover 50% of the gross rent owed by a qualifying small business tenant during April, May, and June 2020
• Landlords can apply retroactively for this Program provided that the landlord can prove eligibility during April, May, and June 2020.
• Landlords must refund any amounts paid by the small business tenant for that period. The refund can be a credit for future rent if agreeable by the tenant and the landlord.

Small business tenants to qualify if:

• The $50,000 maximum in monthly gross rent is per location and defined in a valid and enforceable lease agreement, and
• The small business cannot generate more than $20 million in gross annual revenues calculated on a consolidated basis (at the ultimate parent level).

Reference: http://www.mondaq.com/canada/landlord-tenant--leases/938232/cmhc-comments-on-the-canada-emergency-commercial-rent-assistance-program

Consumer Price Index and Deflation in Canada

Consumer prices fell in several segments of the Canadian economy in April. They included transportation, clothing and footwear, recreation, and education. Gasoline and clothing both experienced the largest decline in the history for those components on record. Statistics Canada (Stat Can) data shows the consumer price index (CPI) fell in April.

Deflation is when consumer prices fall. That is a good thing. After all, who does not want to pay less for things? Declines at certain times, especially if due to decreasing manufacturing costs, can be terrific. Consumers have more money they can spend or invest.

While the Bank of Canada does not want to see sustained deflation (see link for more information about why), they do not deem small price declines over short periods of time to be a problem.

Greater Victoria Neighbourhoods – Triangle Mountain

Looking for a home with an out-of-town feel in a central location that has inspiring ocean and mountain views? Look no further than Triangle Mountain.

Situated outside of Colwood, Triangle Mountain is immersed within Vancouver Islands forests and natural beauty, yet it is a five-minute drive to coffee shops, restaurants and grocery stores, and a 10-minute drive to the Juan de Fuca recreation centre and Q-centre; the athletic hub of Colwood. The recreation centre houses a gymnasium, pool, skating rink, soccer fields, and tennis courts. The Q-centre is the home rink for the Victoria Senior A Lacrosse Shamrocks and the Victoria Grizzlies Junior A hockey team.

The area features custom-built homes with panoramic mountain and ocean views to the east; Mount Baker, Haro and Georgia Strait, and the Olympic Mountains.

If you are a hiker, you will want to head up Havenwood Park to Lookout Lake. Go up the mountainside and the flights of stairs and you will find yourself at Lookout Lake high up on Triangle Mountain. The lake is a local favourite for swimming, picnics, hikes, and shoreline fishing and is regularly stocked with rainbow trout and smallmouth bass. Bald eagles regularly join fishermen to catch fish!

The area first got its name ‘Triangle Hill’ during World War II because it was part of the coastal defence system as a command post. It was used as a navigational aid and point of triangulation for ships entering the harbours. “There were 20 locations across the entrances to the Victoria and Esquimalt harbours,” says Kate Humble, curator at Fort Rodd Hill. “They were like studs on a belt and they all had different purposes…some were gun batteries; some were observation posts and all of them working together was called a fortress defence system.”

Today, the area boasts lovely views and a peaceful serene setting that belies the origin of its name.

Single-Family and Condo Values in Victoria Core

The Multiple Listing Service® Home Price Index benchmark value for a single-family home in April 2020 increased by 4.6 % to $882,700, from its April 2019 value of $843,500, and increased 0.6 % from its previous month value in March 2020 of $877,700.

The MLS® HPI benchmark value for a condominium in April 2020 increased by 3.5 % to $530,700 from its April 2019 value of $512,700, but 0.2 % less than its previous month value in March 2020 value of $531,900.

Why Real Estate Was Deemed an Essential Service

"Real estate services and REALTORS® were declared an essential service by our province in March in order to protect consumers who need to make real estate transactions during this time," says Victoria Real Estate Board President Sandi-Jo Ayers. "Technology has allowed us to move much of our work online. Now you can participate in an open house from the comfort of your couch and manage your contracts and negotiations securely online.”

At some point in the process, we will need to meet, so I and local Realtors are ensuring we adhere to the advice of the Provincial Health Officer. Talk to me to learn the best procedures and strategies when you need to buy or sell your home.

Victoria Real Estate Board’s Report for April 2020

“The available inventory of properties for sale remains lower than in April last year,” says Victoria Real Estate Board President Sandi-Jo Ayers. Greater Victoria saw 2,305 active listings at the end of April, which was 16.2 % fewer properties than the total available at the end of April 2019 but 2.4 % more listings that at the end of March 2020. “Like so many other industries, much of the real estate market is watching, waiting and adapting."

Pacific Opera moves online

Pacific Opera has moved off stage and ONLINE for the foreseeable future to continue to share the love of opera and the knowledge of our artists and community.

Get all the info here: https://pacificopera.ca/about-us/news-media-releases/

Greater Victoria Neighbourhoods – Bear Mountain

Bear Mountain’s internationally acclaimed golf resort and approximately 1,150 residences alongside exudes a clean, contemporary, and upscale atmosphere. The resort and neighbourhood are located on 836-acre rugged and rocky sites, adjacent to Skirt Mountain which is 13 km northwest of downtown Victoria on the boundary between the City of Langford and the District of Highlands.

The intensely beautiful area is part of the Gowlland Range and a popular destination for hikers and mountain-bikers. The area’s name was derived from its indigenous name SPAET ("spa - eth"), which means bear in the Salishan language.

Bear Mountain Golf Resort and Spa is a two course, 36-hole design by Jack Nicklaus in an idyllic natural setting where golfers can enjoy the game even in the middle of winter. Here, you will also find the high-performance Training Centre of Cycling Canada’s National Mountain Bike team, the official Training Centre of Golf Canada’s National Junior Squad and Canada’s largest indoor/outdoor red clay court tennis facility.

Bear Mountain Community Association has the stated vision of “celebrating a quality of life that is unique to Vancouver Island and the value they bring the city of Langford with world-class golf, hotel and spa experiences, hiking, tennis, swimming, restaurants, tournaments, cultural events, shops, and an incredible inclusive spirit.

When you buy a home in Bear Mountain, you’re buying into a lifestyle of outdoor beauty and luxury.

Should Foreign Buyers be Banned from the B.C. Housing Market?

Andrew Weaver, head of the BC Green Party, believes BC should follow New Zealand’s example and entirely ban foreign buyers from owning homes in the province.

“(Foreign buyers) looking for a safe place to park your capital because of tumultuous times. We don’t believe they should put the social costs on British Columbians and make so they can’t afford to live here.”

Joshua Gottlieb, Associate Professor of Economics at UBC has a different perspective.

“There is no evidence that an absolute ban is going to solve the (affordability) problems.”

He and his colleagues with BC Housing Affordability Fund suggest a more measured approach that would not discriminate based on nationality and wouldn’t be such a blunt instrument as an outright ban.

“It would make more sense to raise the property tax but give a credit on income tax if they are participating in the local markets. That would make the tax system more efficient and avoid all discrimination. This surcharge would also allow much more effective data collection as people would have an incentive to report their income taxes and link them to their property taxes in order to get that credit.”

Joshua Gottlieb, associate professor of economics at the University of British Columbia, explains why banning foreign buyers from the Vancouver market won't solve the city's affordability problem.

Rental Eviction Rules – No Evictions Allowed After March 30, 2020.

B.C.’s new measure of banning rental evictions during the COVID-19 crisis left one big question mark: Does the no-eviction rule apply retroactively to tenants in recently purchased homes, where the new owner intends to occupy the property, or where existing eviction notices served before the announcement grandfathered in?

Richard Bell of Bell Alliance – a leading real estate lawyer in B.C. received advice directly from the provincial government and provides clarification:
“Up until today [March 30], if an eviction notice has already been given to the tenants to vacate because the buyers are to take possession, that eviction still stands. However, any new home purchase contract, from today onwards, you will not be able to evict the tenant, under any section of the legislation.”

However, the eviction ban will impact sales of currently tenanted homes because new buyers will not be permitted to evict sitting tenants from March 30 onwards until the ban is lifted.

Victoria Neighbourhoods: Jubilee

On the edge of Victoria, bounded by the municipalities of Saanich and Oak Bay, you will find the neighbourhood of Jubilee – North and South.

It is largely a residential neighbourhood with a wide variety of housing throughout the area and anchored by the Royal Jubilee Hospital with commercial and medical practices close by and clustered around major intersections along the important transportation routes.

The major routes ensure Jubilee residents have easy access to all points around the city. They also enjoy two neighbourhood parks including Redfern and Fern, and kids have access to play areas offered at local schools such as Ecole Victor-Brodeur. The Spirit Garden is a publicly accessible green space; a linear garden linking Newton Street and Kings Road.

The North Jubilee Neighbourhood Association is very active and interested in maintaining a healthy community for their residents. They recently (starting February 2019) lobbied for and received agreement from Saanich councilors to pay $5.5 million to B.C. Hydro who owned the 5.5 acres bordering Royal Jubilee Hospital, with the aim of saving the green space and turn it into a park. (https://www.njna-victoria.net)

Schools include St Patrick’s Elementary and Victoria College of Art – both private schools, and Ecole Victor-Brodeur which is a francophone school for K-Grade 3 students.

Realtors® Still Working

“This is a time to ensure our clients are safeguarded as well as to ensure that our community stays healthy,” says Victoria Real Estate Board President Sandi-Jo Ayers. “Many Realtors are leveraging new technologies including video home tours and virtual showings. Our message is - if you need us, we are here."

Home and Condo Values Still Rising

The Multiple Listing Service® Home Price Index benchmark value for a single-family home in the Victoria Core area increased by 5% in March 2020 to $877,700 - up from $836,100 in March 2019. Homes are also 1.1% higher than February's value of $868,100.

The MLS® HPI benchmark value for a condominium in the Victoria Core area increased by 4.8% in March 2020 to $531,900 – up from $507,700 in March 2019. Condos are also up from the month before with a 0.9% rise from February’s value of $527,400.

The Bank of Canada Lowered the Overnight Rate For the Third Time in March 2020

The Bank of Canada (BOC) lowered its target for the overnight rate by 50 basis points to 0.25% today. The Bank Rate is correspondingly 0.5% and the deposit rate is 0.25%.

This is the third time the BOC has lowered the target for overnight rates; They dropped 50 basis points to 1.25% on March 4th, another 50 basis points to 0.75% on March 13th, and a third 50 basis points to 0.25 % today.

These decisions bring the policy rate to its effective lower bound and is intended to provide support to the Canadian financial system and the economy during the COVID-19 pandemic.

Read full article :
https://www.bankofcanada.ca/2020/03/press-release-2020-03-27/?fbclid=IwAR1X7-Pu0brKLKuyZxL62y4h39USfzPmMoCY16ojhBrFXdjk9wm2VMeo-cg

Big Drops in Mortgage Rates

Here is the latest news: On Friday the Bank of Canada made an emergency rate cut and most of the big banks passed along the full 50 bps of rate cut on Monday.

• The country’s prime is now 2.95 per cent and variable rate mortgages are as low as 1.95%.
• Floating mortgage rates and lines of credit moved from 3.45% to 2.95%.
• The Office of the Superintendent of Financial Institutions (OSFI) has announced the April 6 mortgage stress test improvements has been suspended indefinitely.
• Banks and mortgage lenders are offering mortgage payment deferrals of up to six months.
• Ottawa is planning to purchase up to $50 billion in mortgages.
• Canadian dollar falls sharply against US dollar. It is currently at $0.69 CAD per $1 USD.
• Personal income tax deadline extended to June 1st.
• Real estate supply remains constrained and as of February’s reporting by the Canada Real Estate Association, prices and the number of sales have trended higher.

Real Estate Values Still Rising to Date

You’re hearing a great deal of financial distress in the news of late. It’s important to note that real estate - the value of your home and your investments – will not be impacted anywhere as quickly as mortgage rates and stock prices. And there are counterbalancing market conditions in play – the most important being our constrained market supply. Real estate prices continue to rise in Greater Victoria in good part due to a lack of inventory.

"One of the most prominent aspects of our market right now is this continued low inventory," says Victoria Real Estate Board President Sandi-Jo Ayers. "Our ten-year average active listings for the month of February is 3,007. We concluded this month with just over 2,000 active listings, which means a lot less choice for consumers, more pressure on pricing and multiple offers."