Firing On All Cylinders Replaced By A Downshift
A report from Better Dwellings on Canada. “Empty homes are a unique Vancouver real estate problem. There’s been so much land speculation in the tiny city, that people are literally just buying homes to have them sit empty – sometimes for years. Actually, sometimes for decades. There are currently 4,799 homes listed for sale according to the Real Estate Board of Greater Vancouver, and 463 have never been occupied. This was determined by using voluntarily identifying language from the listing agents, having said things like ‘never been occupied’ or ‘never lived in.’ The oldest place the algorithm found was a condo unit built in 1989, but ‘never lived in.’ The listing at 1235 West Broadway, Vancouver is a 1,885 sqft. condo with 3 bedrooms, 3 bathrooms, and an extensive recent renovation. It’s currently listed for $2,698,000.”
The Vancouver Sun. “The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), the federal agency mandated to detect and combat money laundering, examined about 220 real estate companies in B.C. between 2012 and mid-2016, finding 112 companies with ’significant’ levels of non-compliance and five with ‘very significant’ non-compliance, according to records obtained by Postmedia News through an access to information request.”
“In the past year, FINTRAC has ramped up scrutiny of real estate — particularly in B.C. In an operational brief this week intended for banks and real estate professionals, the agency highlighted the Canadian housing market’s vulnerability to money laundering. The 12-page FINTRAC brief also notes the ‘minimal’ filing of suspicious transaction reports in Canadian real estate, with 127 reports filed on five million sales over 10 years.”
Business in Vancouver. “What started as a local landlord reaction to high vacancy rates has now become a corporate strategy: reducing rents in Alberta multi-family properties to hold and attract tenants as the vacancy rate soars to the highest level in 25 years. Toronto’s Canadian Apartment Properties Real Estate Investment Trust (CAPREIT), which last year purchased a portfolio of 19 Metro Vancouver apartment buildings and holds more than 46,000 other rental units across the country, has reduced rents across its entire Alberta apartment portfolio ‘in order to increase occupancies and reduce turnovers,’ the trust said.”
“The big REIT is not alone among landlords cutting Calgary rents. Mark Hawkins, who owns the rental listing website RentFaster.ca, said rental reductions are now common in the city. The average rent for all Calgary properties listed on RentFaster.ca has plunged 33% from a peak of $2,137 in July 2014 to $1,426 in October 2016. ‘For landlords, it’s a very, very difficult time simply because the vacancy rates are very high,’ said Gerry Baxter, executive director of the Calgary Residential Rental Association.”
“Baxter said many landlords have considered rent reductions, especially when it’s time to renew a lease, in a bid to keep their properties occupied. ‘What I hear from many landlords is if they’ve got good tenants, you want to keep them,’ he said.”
From CBC News Edmonton. “Average housing rental prices in Edmonton have dropped 12 per cent in the past year, and it’s pushing landlords to offer creative incentives. Everything from free cable to free utilities, or a free month in exchange for signing a one-year lease, are on the table for would-be renters. According to Rentfaster.ca, there are currently 3,676 Edmonton listings on its website. Last year at this time, there were only 2,396 rental properties listed. Their vacancy rate is now between seven and eight-and-a-half per cent.”
“‘The higher end properties have been the ones hit the hardest,’ said Mark Hawkins, president of Rentfaster.ca.”
“For those renting and managing properties, the decrease in rental prices seems even worse than the statistics show. John Mclean manages more than 100 properties and says he has noticed a 20 to 25 per cent decrease in rental prices. ‘There was a time when downtown, we were renting an apartment for say, $1,250 for a one bedroom suite,’ said Mclean of Castlegate Property Management. ‘We’re now lucky if we’re getting a thousand dollars for it. They (landlords) are looking for someone that covers their costs. There’s been some cases where we’re barely covering those costs at all. It just makes it tough on both ends.’”
The Saskatoon Star Phoenix. “Remember that small but mighty prairie burg firing on all cylinders, setting growth records in population and job creation, with a booming housing market to match? That Saskatoon is gone — replaced by a city in downshift. Garnet Greer, business manager for the International Brotherhood of Electrical Workers Local 529, estimates a quarter of his membership is out of work right now. He fears it could get worse before it gets better.”
“Meanwhile, the tightening job market is leading to cutthroat competition for smaller commercial projects, according to Greer. He said out-of-province workers are coming in and working for lower pay. He could not say exactly how much lower, ‘but it is substantial,’ he said. Recent numbers confirm what the closing storefronts and proliferating ‘for rent’ signs suggest: an economic slowdown in Saskatoon.”
“The once-brisk pace of housing construction has slowed — especially for duplexes, apartments and townhouses. In its most recent housing market reports for Saskatoon and area, Canada Mortgage and Housing Corporation said there is ’strong evidence of overbuilding.’ In August, 546 multi-units were completed but unsold — more than twice the five-year average and three times the ten-year average. That is despite a 24 per cent drop in multi-unit starts in the first eight months of the year, from the same period last year.”
“Chris Guerette, CEO of the Saskatoon & Region Home Builders Association, acknowledged ‘the industry just overshot a bit’ and predicted it will take a couple of years for multi-units ‘to clear.’ She attributed the weakened demand to falling commodity prices making people more cautious about home purchases.”