Paul Liberatore

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Call for tighter regulations and more protections for buyers of pre-construction projects

An artist's rendering shows the Museum Flats project in Toronto's Lower Junction.Canadian Press/HO - Museum FLTS
The Canadian Press
Armina Ligaya

The cancellation of a ten-storey Toronto condominium development that has thrust would-be owners back into an increasingly competitive condo market has renewed calls for tighter regulations and more protections for buyers of pre-construction projects.

The Museum FLTS condominium cancelled earlier this month is the latest condo project to be shelved. Developer Castlepoint Numa cited lengthy delays in obtaining the necessary approvals, building permits and, in turn, financing, as reasons for the halt.

“Recently, the industry has been experiencing the most significant cost increases in a decade,” the developer said in a post on its website.


Castlepoint Numa is returning deposits to original purchasers and giving them the first opportunity and a discount on the next residential phase of its greater Lower Junction neighbourhood project.

But those promises are cold comfort for Michael Lynn, a 47-year-old musician and university instructor who bought a one-bedroom unit in Museum FLTS 18 months ago. He received a registered letter on his birthday earlier this month, his first inkling that anything was awry.


He was refunded his nearly $60,000 deposit, along with $400 in interest, but does not think he will be able to afford a similar property in the same neighbourhood.

Lynn believes developers should be forced to meet a higher bar before they start selling units and taking deposits.

“At the moment, they can promise the world just to get the buyer in and then, say, ‘I’m sorry we couldn’t do that’.”

In Toronto, 23 condominium projects have been cancelled since 2012 — five of them in the last year, according to real estate consultancy Urbanation.

“I would say this year is a bit higher — most are due to zoning, costs have risen to build relative to what they sold for, and developer insolvency,” said Urbanation’s director of research, Pauline Lierman. “Some of the 2017 cancellations are already sites purchased by another developer and will move forward in a comparable form.”

Toronto Councillor Ana Bailao, whose represents the ward where Museum FLTS was to be built, believes such situations are on the rise. All stakeholders must come together to protect the consumer, she said, while also being mindful not to constrain the industry.

Municipalities don’t have the jurisdiction to regulate the practice, but the City of Toronto has urged the Ontario government to make changes.

Councillor Josh Matlow, who tabled a motion at city hall in 2013 calling on the province to prohibit developers from advertising condos that haven’t received all the necessary permits and approvals, is calling for more clarity to convey to the buyer the project is conditional. There must also be more disclosure when a project does go belly up about what happened, he said.

“For some people, believing that they have a home being built and finding out at the last minute as they have arranged their lives around it that it has disappeared can be devastating,” he said.

The Ontario government is taking a closer look these issues. The Ministry of Government and Consumer Services introduced the Protecting Condominium Owners Act in late 2015, which makes amendments to the Condo Act and leaves the door open for more changes.

“Future regulations could address matters relating to disclosures that condo purchasers must receive from a developer. This could address matters such as the status of the project, planning approvals for the proposal, etc.,” the ministry said in a statement.

As well, the ministry introduced Bill 166 which, if passed, would bring in regulations to specify the information a vendor or builder must disclose to a purchaser or owner of a new home and would also allow the regulations to specify mandatory or prohibited terms and conditions in agreements regarding new homes.

Linda Pinizzotto, the president of the Ontario Condo Owners Association argues the provincial government should also consider protections such as an insurance program for appreciation lost in cases like these, similar to one that covers deposits up to $20,000.

She said more measures should be put in place to protect pre-construction buyers who may find themselves priced out of the housing market if their purchase falls flat after years of appreciation.

The condo market is now driving price growth in both Toronto and Vancouver.

The average price of a Toronto condominium in October rose 21.8 per cent year-over-year to $523,041, while the Vancouver benchmark price rose 22.7 per cent to $642,000.

The momentum has swung towards condos as municipal policy drives higher density housing, and the price gap between low-rise and high rise housing grows. This pattern has had developers increasingly eyeing the condo segment of the housing market, said Frank Magliocco, national real estate leader for consultancy PwC Canada.

“There have been new players who have clearly come to the table, who weren’t in the condo space but have moved there because of the opportunity,” he said.

Still, he added, the cancellation rate of projects across all types of housing in Canada is fairly low, at one to two per cent.


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  • Burnaby placed ninth in the list compiled by the Real Estate Investment Network.REAL ESTATE INVESTMENT NETWORK

The Real Estate Investment Network (REIN) has released its new list of Top 10 cities in B.C. to buy real estate in the next five years.

Surrey tops the list, with Vancouver coming in 10th place.

Abbotsford comes second to Surrey, and the rest following are: New Westminster, Victoria, Kamloops, Kelowna, Chilliwack, the Tri-Cities (Coquitlam, Port Coquitlam, and Port Moody), and Burnaby in ninth place.


The new REIN list comes three years after its last report in 2014, which also identified Surrey as the top B.C. 10 to invest in real estate.

In the 2014 report, Vancouver placed ninth in the list.

Founded by analyst Don Campbell, REIN is a Langley-based real-estate research, education, and consulting organization.

“British Columbia’s is entering a new era of real estate opportunities and challenges,” Campbell states in a media release. “While most think the Lower Mainland’s housing market is priced ‘out of this world’ – limited supply and increasing demand continue to drive this market.”

In the media edition of its new report, REIN notes that Surrey is a “unique combination of a youthful, growing city with a diverse economy that is relatively affordable compared to the rest of the Metro Vancouver region”.

“Surrey’s enviable Pacific Rim location for international trade to Asia and the United States, combined with a diverse economy, deliver substantial business opportunities,” according to the report. “Sectors such as clean energy, finance, insurance, real estate, technology, advanced manufacturing, education, health, agriculture and arts help safeguard Surrey’s economy and make it one of the more resilient cities when it comes to economic booms and busts.”

REIN also notes in the report that Surrey is forecast to become the biggest city in B.C. by 2041.

According to the report, “it’s no wonder Surrey claims, ‘The future lives here’.”

As for Vancouver, the REIN report notes that the city has “all the right economic fundamentals of a world-class city, and attracts foreign investors and capital as a safe-haven on the global scale”.

“While affordability affects the return on investment, strategic investors, over the long-term, will find relatively safe investment opportunities, when timed right and with the right property,” according to the report.

REIN has two warnings about Vancouver.

One is about ‘market influencers’, which include “government policy (in place and proposed), and long delays in building approvals”.

“Strategic investors must pay very close attention to the political rhetoric and policy announcements,” REIN cautions.

The other warning about Vancouver is that it is “at the end of the boom”.

“Cities can remain at the end of the boom for a long, long time,” according to the REIN report. “Peaking affordability, employment, and sales are just a few of the drivers expected at the end of the boom. Vancouver has them all.”

Five cities get honourable mentions in the new REIN list. Fort St. John comes first, followed by Dawson Creek, Township of Langley, Mission, and Maple Ridge. 


Foreign buyers find loophole in Vancouver real estateForeign buyers are back in Vancouver’s residential real estate market, accepting the foreign buyer tax as the cost of doing business.

However, they have also been quietly buying commercial real estate throughout the Greater Vancouver Area for the last year because those purchases aren’t subject to the foreign buyer tax.

As a Pacific Rim city, Vancouver is an especially attractive locale to Asian investors. In addition to proximity, it’s also a financial safe haven.

“A lot of investors from China are interested in purchasing Canadian real estate on small and large scales,” said Colin Dreyer, CEO of Verico Financial Group. They’re even purchasing commercial real estate. Commercial property has been very active in Vancouver simply because there’s no foreign buyer tax.”

“We know that a lot of investors from China are interested in purchasing Canadian real estate, and they do that on small and large scales, so they’ve bought significant properties on the commercial side as well,” said Colin Dryer, CEO of VericoFinancial Group. “A lot of the money has moved from residential to commercial. A lot of people look at Canada as a safe haven for money, and now they’re accepting there’s a cost of doing business. Commercial properties have been very active in Vancouver because there’s no foreign buyer tax. It only applies to residential.

While it is difficult to ascertain whether or not Chinese activity in commercial sector is a direct result of the residential foreign buyer tax, they were not active buyers prior to its implementation.

“That’s been going for a year,” added Dryer. “I don’t know if you can coincide it with the foreign buyer tax, but I would suggest it had an impact in terms of people diversifying. They’ve”
Dreyer says there’s been a spike in real estate activity in in British Columbia, and it could have to do with forthcoming government policy changes the provincial NDP’s is slated to enact early next year. But the tax has influenced foreign buying habits.

“It had an impact in terms of people diversifying,” continued Dryer. “They’ve diversified the locations, they’ve diversified the type properties they’re buying based on affordability and taxation. I do think people are spurred in B.C. at the moment with more activity because of the new housing policy coming in February 2018 with the NDP government.”

Non-residents comprised  5% of Metro Vancouver home purchases in September, according to data released by B.C.’s provincial government, however, the numbers were considerably higher in Richmond and Burnaby, where foreign buyers accounted for 10.8% and 9.6% of purchases, respectively.

Suyan Ge, a mortgage planner with Citywide Mortgage Services, says that the foreign buyer tax has become an accepted reality for foreign investors, so they’re more discerning about where they’ll purchase.

“[Purchases by foreign buyers[ started picking up since April,” she said, “especially in Richmond. The reason is it has the largest Chinese community in the Lower Mainland. In Metropolitan Burnaby, it has the largest shopping mall in Lower Mainland called Metropolis at Metrotown. It’s convenient and also has Crystal Mall, a Chinese Mall, and a lot of new apartments and lots international students living in that area. The transportation is also very convenient.”

Ge added that many foreign buyers don’t leave their purchases vacant, but house their children in them – who are most often students or have work permits.

Additionally, Surrey has seen its number of foreign buyers increase threefold.

“They like living by the ocean,” said Ge. “The property prices are way lower than the west side of Vancouver. The west side has the most expensive properties in Lower Mainland. In White Rock, you can get a nice view and only pay half the price. South Surrey and White Rock also have some properties with really big lots.”



Metro Vancouver home sales exceeded typical historical levels in October with the majority concentrated in the townhouse and apartment markets.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in the region totalled 3,022 in October 2017, a 35.3 per cent increase from the 2,233 sales recorded in October 2016, and an increase of 7.1 per cent compared to September 2017 when 2,821 homes sold.

Last month’s sales were 15 per cent above the 10-year October sales average.

“Conditions continue to vary significantly based on property type. The detached home market is well supplied with homes for sale, which is relieving pressure on prices,” Jill Oudil, REBGV president said. “It remains a much different story in the townhouse and apartment markets. Buyers of these properties continue to have limited supply to choose from and are seeing upward pressure on prices.”

There were 4,539 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in October 2017. This represents a 14 per cent increase compared to the 3,981 homes listed in October 2016 and a 15.6 per cent decrease compared to September 2017 when 5,375 homes were listed.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 9,137, a 0.1 per cent decrease compared to October 2016 (9,143) and a 3.5 per cent decrease compared to September 2017 (9,466).

For all property types, the sales-to-active listings ratio for October 2017 is 33.1 per cent. By property type, the ratio is 16.8 per cent for detached homes, 44.8 per cent for townhomes, and 66 per cent for condominiums.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

“The growth in our provincial economy and job market is contributing to today’s demand,” Oudil said. “The federal government’s announcement of plans to tighten mortgage requirements for the seventh time in the last eight years also helped spur activity in the short term. Many buyers are trying to enter the market before the changes are in place.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,042,300. This represents a 12.4 per cent increase over October 2016 and a 0.5 per cent increase compared to September 2017.

Sales of detached properties in October 2017 reached 940, a 44.2 per cent increase from the 652 detached sales recorded in October 2016 and a 34.6 per cent decrease from the 1,437 sales in October 2015. The benchmark price for detached properties is $1,609,600. This represents a four per cent increase from October 2016 and a 0.5 per cent decrease compared to September 2017.

Sales of apartment properties reached 1,532 in October 2017, a 30.1 per cent increase compared to the 1,178 sales in October 2016 and a 0.7 per cent decrease from the 1,543 sales in October 2015. The benchmark price of an apartment property is $642,000. This represents a 22.7 per cent increase from October 2016 and a one per cent increase compared to September 2017.

Attached property sales in October 2017 totalled 550, a 36.5 per cent increase compared to the 403 sales in October 2016 and a 17.4 per cent decrease from the 666 sales in October 2015. The benchmark price of an attached unit is $802,400. This represents a 17.7 per cent increase from October 2016 and a two per cent increase compared to September 2017.

The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Real Estate Board of Greater Vancouver (REBGV), 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 REBGV, 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 REBGV, the FVREB or the CADREB.