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Relocation, relocation, relocation: Canadians love their neighbourhoods, but will move to achieve housing affordability

• For 64 per cent of Canadians, relocation is among the top sacrifice they’d be willing to make in order to achieve housing affordability; however, half (50 per cent) agree that the farthest they would go would be less than 100 kilometres
  • 56 per cent say that moving to a different neighbourhood/community would be one of the top three sacrifices they would make
  • 38 per cent would make the sacrifice of moving to a different city/province/region regardless of distance
• 38 per cent of Canadians define housing affordability as a home they can afford that meets their basic needs, and includes some liveability elements, such as green spaces and restaurants
• Based on average residential selling price, Brandon, MB ranked as the most affordable market in 2022, replacing Winnipeg which was most affordable in RE/MAX Canada’s 2021 ranking. This is followed by Regina, SK (which remained on the list year-over-year), St. John’s, NL, Moncton, NB and Red Deer, AB
• Based on the share of income spent on mortgage payments, Red Deer, AB ranked as Canada’s most affordable housing market, with 25.86% of average monthly income spent on the average-priced home. This is followed by Regina, SK (26.94%) and Brandon, MB (27.73%) in Western Canada. Eastern Canada’s most affordable regions to buy a carry a mortgage include Thunder Bay, ON (29.78% of monthly income spent on mortgage), followed by St. John’s, NL (31.45%) and Moncton, NB (33.4%)

Toronto, ON and Kelowna, BC (July 20, 2022) — RE/MAX® Canada’s 2022 Housing Affordability Report reveals that 68 per cent of Canadians are willing to make at least one sacrifice to buy a home they can afford, according to a Leger survey commissioned by RE/MAX Canada. The most common concession is relocation, as identified by 64 per cent of survey respondents – a trend that continues to reign as a primary influence in local housing markets across the country, say RE/MAX brokers. This is followed by 56 per cent indicating they would be willing to sacrifice the type of home they purchased; purchasing a home under co-ownership with family and friends, as identified by 29 per cent of survey respondents; and renting a part of their home for additional income, at 27 per cent.

According to the same Leger survey, 43 per cent of Canadians said the high price of real estate in their area was a barrier to entry into the market. This is up one per cent from last year. Other hurdles include a higher cost of living (35 per cent); a shortfall in salary (24 per cent, down two per cent from 2021); market volatility (24 per cent); and rising interest rates (24 per cent, up six per cent from 2021).

“Despite affordability challenges across the cost-of-living spectrum, Canadians are still eager to engage in the housing market – even if it means making some sacrifices in the short-term to achieve affordable home ownership,” says Christopher Alexander, President, RE/MAX Canada.

RE/MAX Canada asked Canadians to define what “housing affordability” means to them – 38 per cent of survey respondents defined affordable housing as “a home they can afford and meets their basic needs, and includes some of the liveability elements they like such as proximity to school; or walkable neighbourhoods,” to name a few.

“While we wait for governments to implement a national housing strategy to boost Canada’s supply of affordable housing, in the short-term the market is starting to cool and balance itself out, bringing some much-needed relief from the sky-high prices that we experienced during much of the pandemic. This trend is largely being driven by higher interest rates,” says Alexander.

Distribution space the star as Alberta’s real estate markets fire up

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Amazon’s 2.9 million-square-foot sortation facility in Edmonton’s Acheson area completed during the third quarter. Panattoni Development

Edmonton’s industrial vacancy rate has fallen by nearly a third over the past year as strong demand for logistics space continues.

The city saw nation-leading uptake of industrial space of nearly 3.8 million square feet in the third quarter, according to Colliers International. While much of it was from purpose-built space in two properties, strong demand helped pushed vacancies down to 4.2 per cent versus 6 per cent a year earlier.

“Industrial is heavily driven by distribution, logistics,” said Susan Thompson, associate director of research with Colliers, noting that demand is coming from within the province as well as beyond. “There are a lot of reasons companies are now considering utilizing that. … [You] have well-educated, skilled labour in Alberta. It tends to be more affordable on housing, on rental rates. You have the ability to develop as needed.”

While Edmonton continues to lead the country in terms of vacancies, the strong uptake in space points to ongoing demand despite challenges in segments of some other markets.

While strata industrial space in B.C. is facing headwinds from rising construction costs and longer decision-making timelines, the shortage of options for large-scale users for fulfilment centres has continued. People may be paring back spending, but they’re continuing to shop online and that’s supporting the need for new space to accommodate the demand.

The largest chunk of space absorbed in Edmonton during the third quarter was the 2.9 million-square-foot Amazon sortation facility which completed in the Acheson area.

Demand also remains high in Calgary, where vacancies totaled 2.2 per cent in the quarter, down from 4.9 per cent a year ago.

“Given the lack of available inventory in the market, we’re also seeing inducement compression on new deals, with landlords becoming less willing to fund improvements or offer free rent to the extent that they may have in the past,” Colliers reported. “Pre-leasing on high-quality new developments is seeing strong interest from a variety of groups, both for recently completed buildings and planned or under construction projects.”

Concern about retaining access to space is so great that many tenants are signing renewals or new leases well in advance of their existing agreements expiring.

The torrid pace of industrial activity is in stark contrast to office demand.

Calgary’s office market continues to work through a large oversupply. Vacancies fell to 27.5 per cent during the quarter from 28.6 per cent a year ago even as companies continued to right-size space requirements. Subleases now account for 18.9 per cent of vacancies, down from 22.8 per cent a year ago.

High vacancies have limited new construction in Calgary, unlike in Edmonton where tenants are moving into space purpose-built for them. This has kept overall vacancies in check, falling to 19 per cent, despite some users returning significant blocks of space to the market.

“Office construction is either very specific to a tenant, or it’s for those professional services that are tied to population growth,” Thompson said. “Suburban seems quite popular with some companies because it better enables the return to office because there’s less reliance on public transit.”

The quarter saw 73,625 square feet of office space absorbed during the quarter, all but 148 square feet in suburban markets. But the downtown market is strengthening, with further activity expected now that workers have returned from summer holidays.

“For the first time since the start of the pandemic, two new office construction projects have been announced,” Colliers noted. “Canadian Western Bank Tower in the downtown core is expected to be approximately 350,000 square feet, with only 120,000 square feet vacant once CWB takes possession.”

The tower is set to complete in 2025.

The other project on the books is EVER Square, a 125,000-square-foot medical-office building under construction at Calgary Trail and Gateway Blvd. set to complete towards the end of 2023. The office component is 78,000 square feet.

The positive absorption led to Edmonton office vacancies staying in check at 19 per cent, down marginally from 19.4 per cent a year ago.

Boston-based tech firm has inked a long-term lease on facility near Edmonton that will employ up to 90 tech workers

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A leased industrial building at 220 Carnegie Street, St. Albert, is being transformed into a state-of-the-art manufacturing facility.

Officials at Boston-based Orbia’s Connectivity Solutions business, Dura-Line, are investing in a new state-of-the-art manufacturing facility in the Edmonton suburb of St. Albert, Alberta.

“Not only will this strategic location enable us to meet strong demand in the region, but it allows us to take advantage of the highly skilled labour force in Greater Edmonton,” said Dale Wilson, Dura-Line’s vice-president of sales and marketing in the U.S .and Canada.

Dura-Line, which specializes in developing Internet connection systems, currently ships into Western Canada from plants in Ontario, Utah and Nevada.

“We felt it was time for Dura-Line to put down roots in Edmonton to serve these customers even better,” Wilson said.

Dura-Line has begun retrofitting an existing building to create the 150,000 square-foot state-of-the-art facility in St. Albert and has plans to hire as many as 90 full-time employees over the next nine months – with the goal to be fully operational by spring of 2023.

Dura-Line is owned by Orbia, formerly known as Mexichem, which is a mass-producer of polymers, polyvinyl chloride, and a range of other infrastructure-based plastic products. In 2021, Orbia reported a net revenue of $8.8 billion US.

The St. Albert plant will be Dura-Line’s second Canadian facility. The other, located in Gravenhurst, Ont., is currently manufacturing all of Dura-Line’s products sold in Canada.

The new Alberta facility has been a couple of years in the making, according to Paul Sartori, the director of sales for Dura-Line in Canada.

“We see a significant upside in the Canadian market,” Sartori said in an interview. “It’s time that we step up in Canada and do what we do and really leverage that global footprint that we have.”

“If you’re looking at shipping stuff from Ontario across to Alberta, for example, it gets pretty pricey these days with supply chain interruptions and increased cost across the board,” said Sartori. “It just made more sense to put a point of presence there and support the local economy of St. Albert.”

To get the leased facility operational, Sartori said the Carnegie Drive building is undergoing significant renovations, which are already underway.

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High inflation, rising interest rates, and overall economic uncertainty are driving factors in the expected decline of home sale prices this fall, according to a new report from Re/Max Canada.

The national average residential sale price in Canada is expected to drop 2.2 per cent in the final months of 2022, according to Re/Max Canada’s 2022 Fall Housing Market Outlook report. Out of the 30 markets analyzed, six are likely to experience a modest price appreciation, up to seven per cent. 

In a survey of Re/Max brokers and agents, 22 out of 30 said rising interest rates have affected activity in their local residential market this year, with some indicating that this has been the most significant factor impacting homebuyer and seller confidence. 

According to a new Leger survey commissioned by Re/Max Canada, 44 per cent of Canadians agree that rising rates are compelling them to hold on buying a property this fall, while 34 per cent say they won’t hold. 

Christopher Alexander, president at Re/Max Canada, believes the housing supply shortages are still a significant issue country-wide. “…the current lull in the market is only temporary,” he says, “Until housing supply increases, these ‘boom’ and ‘bust’ cycles will likely be a recurring event.”

Elton Ash, executive vice president at Re/Max Canada, added, “Despite the fact that nearly half of Canadians are waiting to buy or sell a home, we’re confident that as economic conditions improve by mid-2023, activity will resume.”

Highlights from Re/Max’s regional fall housing market insights

Re/Max brokers and agents in Canada were asked to provide an analysis of their local markets this fall and share their estimated outlook for the remaining months of 2022.

Western Canada and the Prairies

• • In regions such as Vancouver, Victoria, Kelowna, and Edmonton, brokers reported fewer multiple offers from buyers and a shift toward more balanced conditions between buyers and sellers.
  • The average home price is expected to decline between zero and 6.5 per cent, with the exception of Calgary and Edmonton.
  • Economic concerns have not had a notable effect on the market in Calgary, which according to agents, has been largely insulated due to its relative affordability. The region is anticipating a modest price increase of three per cent. 
  • In Edmonton, rising interest rates have impacted homes priced from $500,000 to $1,000,000, while those priced at $400,000 or less are still relatively affordable. Edmonton is likely to experience a modest price increase of 1.5 per cent. 
  • Demand for luxury properties in Vancouver and Edmonton remains stable. 
  • Low inventory remains a concern in Kelowna, Victoria, Vancouver, and Calgary and is expected to place upward pressure on home prices in 2023.

Ontario

• • Markets including Oakville, Windsor, Barrie, Durham, Kingston, and Kitchener-Waterloo anticipate a reduction in the number of units sold.
  • Apart from Oakville and Muskoka, average home prices are likely to remain steady or decrease between two to 10 per cent.
  • The luxury market has remained resilient and in demand among buyers in Oakville, contributing to the expected two per cent average price increase.
  • Muskoka is expected to experience a five per cent increase in average residential sale prices. 
  • Peterborough is expected to see a seven per cent decrease in average residential sale prices.
  • The return of conditional offers has been a prevalent trend across the province.
  • Durham, London, Sudbury, Ottawa, the Lakelands, and GTA-Toronto are expected to regain balance in 2023, albeit with low inventory continuing to place upward pressure on prices.
  • Thunder Bay is unlikely to experience any significant fluctuations this fall. 

Atlantic Canada 

• • Charlottetown, PEI experienced immediate impacts as interest rates rose, with the number of sale transactions reduced by almost half on a month-over-month basis, particularly among properties in the $500,000 to $1,000,000 price range. 
  • Most Atlantic Canada housing markets analyzed are expected to experience modest price increases through to the end of 2022, with the outlier being Charlottetown.

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The city will transfer the land to Homeland Housing for a mixed-income residential and commercial development.

A bird’s eye view shows the area at 22 St. Thomas St. that will be the future site of a Homeland Housing project.

St. Albert city council has voted to approve a land transfer agreement with Homeland Housing for an affordable housing unit in the city’s downtown core.

On Sept. 19, council voted to have the city’s chief administrative officer (CAO) approve an agreement to transfer the land — a 1.3-acre parcel in St. Albert’s downtown at 22 St. Thomas St. — for $1.

In early 2020, St. Albert issued an expression of interest to explore options for the downtown site, and selected Homeland Housing’s proposal. The mixed-income residential and commercial development will include a minimum of 55 per cent of units priced at 10 to 20 per cent below median market rates (which for a one bedroom is currently $1,195, and for a two bedroom, $1,355).

Later in December 2021, council directed the chief administrative officer to draw up a land transfer agreement with Homeland Housing.

Originally planned as office space for city employees, 22 St. Thomas St. went up for sale on the open market in 2019 for $3.82 million, but no developers expressed interest, according to an administrative backgrounder. The land is currently valued at $2.65 million.

Lory Scott, the city’s affordable housing liaison, said the proposed project is aligned to council’s strategic goals, and the land transfer agreement “uses an undeveloped resource already owned by the city to provide a long-term community and social benefit.”

During the council meeting, residents Judith Hierlihy and Ken Kachula addressed council to oppose the use of the land for affordable housing provided by Homeland.

“We believe Homeland Housing’s proposed mixed-use building … will not be the catalyst needed to strengthen downtown redevelopment,” Hierlihy said, adding that the need for extra commercial rental space in the downtown is “questionable.”

The two are members of the Neighbours of Lot 22 Committee, representatives of four downtown condo buildings on St. Joseph Street.

In April, the committee addressed council to pitch an office and arts space as another option for the land in lieu of the affordable housing project.

During the Sept. 19 city council meeting, Hierlihy asked council to name the parcel of land at 22 St. Thomas St. “Millennium Park East,” and reserve it for future land development of the committee’s proposed dual civic office building and performing arts community.

While Hierlihy raised concerns surrounding potential tax requisitions the city would pay to Homeland Housing for the project, Raymond Cormie, the executive director for Homeland Housing, told council these requisitions do not apply to community affordable housing.

Homeland Housing only receives tax requisitions for its seniors’ lodge program, Cormie said. The program provides living space, meals, housekeeping services, and recreational opportunities for independent seniors.

Coun. Sheena Hughes asked how much parking Homeland Housing is planning to provide as part of the facility.

Cormie said parking will be worked out as part of the development permit process.

The city and council will see the proposed development design when it is at 50-per-cent and 80-per-cent completion.

Coun. Natalie Joly said facilitating an affordable housing project downtown is central to council’s values.

“This is an exciting next step at a time when the federal and provincial governments have shown interest in funding this kind of collaborative project,” Joly said.

Similarly, Coun. Wes Brodhead said during debate that affordable housing “has been a constant need in our community.”

“One of the stumbling blocks … has always been land,” Brodhead said. “I appreciate this coming forward, and I look forward to a vibrant development in the downtown core that will actually bring people to our downtown and that will just add vibrancy.”

Coun. Shelley Biermanski said in an interview she doesn’t feel the land transfer itself is the right course of action for St. Albert.

“It was just to me an enormous amount of money in value of land for a city of our size,” Biermanski said. “It was not justified to me.”

The motion to approve the land agreement passed 6-1 with Coun. Shelley Biermanski opposed.

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If you’re a homeowner, headlines like “a sharp correction is coming” and “the bubble is about to burst” send shivers up your spine, but they are music to the ears of anyone looking to break into the market.

The extreme downward trajectory of house prices suggested by these headlines and expected in some parts of Canada is not, however, on the horizon in Alberta.

Average home prices in Vancouver and Toronto were already skyhigh going into the pandemic while other Canadian cities have experienced rapid price escalation since COVID became a household word.

Take Moncton, New Brunswick: According to the Canadian Real Estate Association, the benchmark* price of a home on the resale market in the city jumped by 82% between February 2020 and July 2022. With the benchmark at $334,500, it was still a relatively affordable market (the benchmark in Toronto in July was, for example, $1,184,100), but buyers still had to come up with over $150,000 more for a typical home in the area than they did just two-and-a-half years ago.

While markets like Halifax-Dartmouth (+70%), Victoria (+50%) and Hamilton-Burlington (+49%) saw prices spike during the pandemic, Calgary and Edmonton posted solid, but more modest, growth at +25% and +16%, respectively. As such, because a housing bubble didn’t form here, there isn’t one to burst.

At the same time, robust economic growth in Alberta (we will likely lead the country in this regard in 2022), the recent return to being a net recipient of interprovincial migrants, a somewhat younger (though still aging) population, and the high quality of life offered here provide strong support for the provincial housing sector going forward.

As a recent report from Desjardins points out, “the oil-producing provinces of Alberta, Saskatchewan, and Newfoundland and Labrador [are] benefitting from post-pandemic tailwinds, largely in the form of higher commodity prices. The resulting job creation and workers it attracts from across the country will provide support to existing home sales and prices.”

Higher interest rates combined with national and global economic uncertainty may eat away somewhat at home prices in Alberta, but we should be able to avoid the potentially severe erosion that some other markets may experience.

*The MLS® Home Price Index (HPI) model is used to calculate benchmark prices in key Canadian markets. A “benchmark home” is one whose attributes are typical of homes traded in the area where it is located and includes single family homes, townhouse/row units and apartment units.

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Canadian rental prices have seen the highest month-over-month increase in years.

A new report finds that rental prices across Canada have seen the biggest month-over-month increase in years — and Vancouver continues to see the highest rent in the country.

Online apartment rental platform Rentals.ca has released its June 2022 National Rent Rankings report, which analyzes the average rental prices for its listings in May.

Across Canada, the average rent for apartments in May was $1,888, which represents a year-over-year increase of 10.5 per cent.

“This also represents a month-over-month increase of 3.7 [per cent], the largest monthly increase since May of 2019,” note the report authors.

Vancouver continues to see the highest rental prices in Canada, for both one and two-bedroom units. The average cost of a one-bedroom apartment in May 2022 was $2,377, which is a 1.8 per cent increase over last month and a whopping 19.1 per cent year-over-year increase.

Two-bedroom apartments cost an average of $3,495 in May, marking an increase of 5.1 per cent over last month and a staggering 24.1 per cent increase year-over-year.

Toronto has the second-highest rental prices in the country, with one-bedroom units averaging $2,133 in May; two-bedroom units averaged $3,002.

Another B.C. city, Burnaby, rounded up the top three most expensive cities in Canada. One-bedroom apartments cost $2,012 while two-bedroom units cost $2,645 in May.

Two Ontarian cities completed the top five highest Canadian rental markets in May: Oakville and Burlington.

Rent Vancouver and beyond: Average prices across Canada for apartments to rent

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Conservationists want modifications to 617-acre site to protect wildlife habitat.

Lakeview Business District offers 617 acres designated as employment lands in the city’s Municipal Development Policy.City of St. Albert

A committee of St. Albert city council is recommending that land near Big Lake remain open for industrial development despite the concerns of conservationists.

The area, directly south of Meadowview Drive and west of Ray Gibbon Drive, is part of the proposed Lakeview Business District. The St. Albert Municipal Development Plan (MDP) adopted in 2020 identifies Lakeview as the city’s next industrial park. A total of 617 acres are designated for greenfield development.

But on May 31, 2021, then-councillor Jacquie Hansen put forward a motion to change the land’s designation to major open spaces to protect a greater amount of land near Big Lake. Council voted to gather more information about the implications of the proposed motion.

While employment areas outline land for industrial and office-based use, major open spaces outline land to be enhanced and protected for its natural features as the city grows.

City staff presented the results of stakeholder and landowner engagement regarding the motion to council’s community growth and infrastructure standing committee June 13, after which the committee voted to abandon the motion.

Lyndsay Francis, senior planner with St. Albert, told the committee that the land south of Meadowview is developable and not within a flood line.

“The major open spaces policies within [the MDP] discuss some pretty specific terminology like natural features and flood-prone areas which don’t apply to this subject area,” Francis said.

Within the current MDP, the shores of Big Lake are protected by around 500 metres of setback area, Adryan Slaght, the city’s director of planning and development, told the committee.

Landowners the city consulted in the area also outlined the land south of Meadowview Drive as the most cost-effective area to place future stormwater management facilities, Francis said. The major open spaces designation is incompatible with this land use.

Further, if the designation of the lands is changed, the city may need to purchase the lands, Francis said.

Estimates currently value the land at $21 million to $27 million, not including park development and loss in future non-residential tax assessment.

While some internal city departments, such as the parks and recreation department, utilities, and planning departments, voiced concerns about the change to major open spaces, Francis said the city’s environment branch supported the change to major open spaces because the land is near Big Lake and includes an important bird area.

According to the Big Lake Environmental Support Society (BLESS), the area provides valuable nesting habitat for swans and pelicans, and is home to a host of other wildlife.

Alberta Health Services (AHS) also supported the proposed amendment, Francis said, outlining that maintaining and protecting natural areas has been found to benefit the physical and mental well-being of those who use the areas.

Slaght said the land under Meadowview Drive contains small spruce tree stands that were surveyed previously as holding wildlife habitat value.

In response to a question from Coun. Mike Killick about whether a developer would be able to cut down the trees, Kristina Peter, city planning branch manager, said the city has a policy that environmentally sensitive areas need to be protected.

The city recently kicked off work on more detailed planning that includes the area under Meadowview Drive, a document that will be called the St. Albert West Area Structure Plan (ASP).

“Part of the ASP would be setting out some regulation for those areas to be protected as well,” Peter said.

Should council approve its committee’s recommendation, Druett said he still sees a way forward to protect the land with the St. Albert West ASP planning process.

“That’s where we’ll be giving our input, and that might be an opportunity to come up with something that works,” Druett said.

Coun. Natalie Joly said Monday evening that she voted to rescind the change to major open spaces because the information administration provided was comprehensive.

“The particular designation [of major open spaces] is not meant for the type of use that was being proposed,” Joly said, noting the committee heard the city is going to need stormwater management facilities in that area. “That’s a really straightforward one.”

Council’s committee voted unanimously to recommend rescinding the change.

BLESS member Tony Druett is “very disappointed” in the committee’s recommendation, but “not surprised.”

“City planning personnel have been quite co-operative, but they’ve been quite clearly trying to come up with arguments why not to make this change,” he said.

BLESS would like to see Meadowview Drive become a boundary road to the area the city has carved out for industrial development, rather than run directly through it, Druett said.

Council is set to vote on the committee’s recommendation at its June 20 council meeting.

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Soaring crop and oil prices place Saskatchewan, Alberta and Manitoba No. 1, 2 and 3 among provinces, RBC says.

Saskatchewan will lead Canadian provinces in economic growth in 2022, with Alberta and Manitoba ranked No. 2 and No. 3, according to provincial forecast from RBC economist, released June 7.

RBC projects growth will be strongest in Saskatchewan, 6 per cent, Alberta, up 5.7 per cent, and Manitoba, with a 4.8 per cent economic expansion compared to 2021.

British Columbia will fall “to the middle of the pack,” economists Robert Hogue and Carrie Freestone said in their report, due to a decline in the housing market.

Last year B.C. registered the highest rate of economic growth among the four largest provinces, and second in Canada only to Prince Edward Island, where the provincial economy is also highly dependent on the residential real estate.

Strong global demand and prices for commodities are significantly boosting Prairie prospects, the report notes. Saskatchewan stands to report a huge rebound in agricultural production this year, coming off an exceptionally low level in 2021.

“We expect stronger agricultural production will also drive up overall economic growth in Manitoba and Alberta,” the economist noted.

“The massive upswing in global energy markets is further benefiting Alberta’s economy. While crude production to date in the province is largely in-line with year-ago levels, the value of energy exports is up 50 per cent due to higher prices.”

As of June 8, the price of West Texas Intermediate (WTI) crude, an industry standard, was at $122.40 per barrel, the highest level since September 2008.

In British Columbia, capital investment in the natural resource sector (including the construction of a major liquefied natural gas project) will continue to play a key part of the province’s growth story, the report noted. Natural gas is now priced near $9 per million British thermal units, the highest level in eight years.

But RBC cautions that B.C.’s reliance on the residential industry leaves it exposed this year. The bank is forecasting B.C. economy will expand 4.2 per cent this year – down from 2021’s 5.9 per cent growth – and even with Canada’s projected growth.

“We expect rising interest rates will further moderate home resale activity in the period ahead and broaden the cooling effect to other regions. Rapidly deteriorating affordability – especially in Canada’s most expensive markets – will make it increasingly difficult to sustain recent property values,” the RBC economists said in their analysis.

“In fact, we believe home prices have already reached a tipping point in several markets in Ontario and British Columbia. Slower activity will tamp down the substantial contribution the housing sector made to economic growth during the pandemic.”

Multiple listing service residential sales in B.C. are projected to decline to 97,240 units this year, down 22 per cent from 2021’s record high, according to the BC Real Estate Association’s latest forecast, released May 31. Residential sales are forecast to fall an additional 12.4 per cent to 85,150 units in 2023.

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Regional and outlier centres far east as Alberta now an option as Metro Vancouver’s land base shrinks and prices skyrocket.

A five-acre industrial parcel in Port Coquitlam sold in May for more than $2 million per acre as a land shortage push values higher. | Lee & Associates.

Metro Vancouver’s rapidly diminishing base of industrial land is forcing industry to consider new ways and new places – to meet demand that shows no signs of slowing down.

“We’re at a critical land supply shortage in the region, and persistent vacancy below 1 per cent, and we need to find creative solutions to create new supply for the market,” says Jason Kiselbach, senior vice-president and regional managing director in Vancouver with CBRE Ltd.

Metro Vancouver released a survey of the region’s industrial land supply last year that identified 3,126 acres of vacant, undeveloped industrial land. But it noted that not all those properties are suitable for current users, meaning absorption lags actual demand.

The report notes that the average size of parcels is less than five acres, too small for major warehouse development. While the report suggests that the supply could last into the 2030s, CBRE suggests that realistic estimates put the developable land supply at closer to six to eight years.

“You just can’t deliver supply fast enough. It’s just being absorbed, and we don’t see that demand drying up in the near term,” Kiselbach said. “We’re not able to get more of that supply to the market.”

According to CBRE’s industrial market report for the first quarter, Vancouver leads the country with the highest asking sales price of $575 per square foot, followed by Toronto at $346.22. But in markets such as Richmond, prices are cresting $750 a square foot.

The impacts of such dramatic escalations are felt across the market.

“The strata market has been the key driver of land,” Kiselbach said. “That doesn’t help the critical shortage of space available for leasing, especially mid-bay or even large-format space.”

While approximately nine million square feet is under construction in Metro Vancouver, 80 per cent is spoken for. Moreover, upward pressure on lease rates has made landlords reticent to enter long-term leases unless there’s room to reset rents midway through.

“They don’t want to lock in at today’s pricing,” Kiselbach said. “They want to do a shorter-term deal and have the ability to review that lease rate sooner.”

But relieving pressure on lease rates in a space-constrained market like Vancouver won’t be easy.

With several uses competing for available sites, all users have to make better use of the land base they’ve got. This favours strata units, which are typically smaller units that lend themselves well to densification. Stacking is more difficult for large-format warehouses, which require cross-docking and parking.

Sometimes, it takes creative thinking – and lots of patience – to secure additional land.

Conwest Group hopes to develop a 600,000-square-foot warehouse on three parcels in Langley adjacent to Gloucester Industrial Estates. A 2017 court decision cleared the way for exclusion of the properties from the Agricultural Land Reserve. Conwest Group satisfied the conditions necessary for exclusion earlier this year. Rezoning of the site passed third reading on May 9 and the proposal will next head to Metro Vancouver for approval.

Conwest COO Ben Taddei says the process illustrates the potential for projects to move forward in the region but admitted there are plenty of hurdles left to clear. Construction is unlikely for at least three years.

In Port Coquitlam, a May sale of light-industrial land topped more than $2 million an acre. The five-acre property, located at 590 Dominion Ave., was sold for $10.65 million to a private company, according to commercial real estate broker Lee & Associates of Vancouver

Some developers and tenants are looking further afield.

Last summer, Denciti Development Corp. and Kadestone Capital Corp. purchased 8.5 acres in Squamish to serve local companies. Plans call for light industrial units serving arrange of manufacturing and tech companies, many of which have chosen to stay in Squamish. This has made the market a viable option to Metro Vancouver, especially for those companies with roots in the Sea to Sky corridor or seeking to serve businesses in Whistler and beyond.

Similarly, Beedie recently unveiled plans for the Stratosphere Business Centre on 14.7 acres adjacent to Kelowna International Airport.

But some companies are taking a close look at relocating further afield.

“We’re hearing from clients that own properties in both provinces now that they’re seeing the same names show up on tour sheets in both Vancouver and Calgary, and sometimes Edmonton as well,” Kiselbach said.

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But Vancouver is the most unaffordable city in Canada and third least affordable in the world, a new survey states

Edmonton is the most affordable city for housing in Canada and Calgary is in among the top 10 most affordable cities in the world.

But, according to the 2022 edition of Demographia International Housing Affordability, Vancouver has Canada’s most expensive housing and is the third most unaffordable city out of 90 major urban markets on the planet.

The annual Demopgraphia survey looked at cities in the U.S., the U.K., Canada, Australia, New Zealand, Ireland, Singapore and Hong Kong. Of the 92 cities surveyed, Vancouver was only behind Hong Kong and Sydney, Australia. Last year Vancouver was ahead of Sydney.

The survey uses a median multiple to assess affordability. That’s a ratio of income to housing prices, using the local median for both. An affordable city would see a rating of three or below.

Vancouver scored 13.3, up from 13 last year.

Unfortunately for residents of Australia’s biggest city, Sydney saw a much bigger bump and hit 15.3 this year. Hong Kong continues to be well ahead at 23.2. The study’s authors note Vancouver’s market spreads well beyond municipal boundaries.

“Severely unaffordable housing has spread from Vancouver to smaller markets, as Metro Vancouver has shed domestic migration to smaller markets in British Columbia, such as Chilliwack, the Fraser Valley and Kelowna and markets on Vancouver Island,” states the study’s authors.

In Edmonton, Canada’s most affordable city, the current composite home price, according to the Canadian Real Estate Association, is $364,400 and the average annual income is $95,632, based on 2022 data from Average Salary Survey. In Vancouver, the average income is $89,971 this year and the current composite home price is $1,360,500.

None of the major Canadian cities were rated as “affordable,” and, in fact, only one U.S. city (Pittsburgh at 2.7) was deemed affordable by the survey. Edmonton scored a 3.6, which was the fourth best of those surveyed and best in Canada. Both major Albertan cities were deemed moderately affordable; Calgary was second-best in Canada and in the top 10 most affordable at number 4.

Ottawa (5.6) and Montreal (6.1) were close, and both were considered severely unaffordable. Toronto was in the same category, but much closer to Vancouver with a 10.5.

“The markets in Canada have a median multiple of 6.0, up from 4.4 in pre-pandemic 2019,” state the study’s authors. “This increase of 1.6 years in median household income is the largest among included nations in the report.”

The study notes that urban planners have tried to work on unaffordability with limited success.

“Even with densification, housing affordability has deteriorated substantially, for example in Sydney, Auckland, Vancouver, Toronto, San Francisco, Seattle and many other markets,” state the authors.

Source

Cheaper housing, higher wages lure families east

The sunshine and beauty are assets, but high housing costs are driving some Okanagan residents back to the Prairies.

She’s 32-years old, has three children and a good income, but Andie is moving back to Alberta because it’s just too expensive in Kelowna.

The cost of living, especially housing, is forcing her to go back to Edmonton, where she grew up.

Andie came to the Okanagan in 2011 and pays $2,300 a month for what she describes as a very small, three-bedroom apartment. For a time, she shared it with her mother, to help cover costs.

“I have a full-time job, but I’m expecting. So, once I leave my job my income is going to go down and the cost of renting here is too high for our incomes,” she says.

Andie says what she can find in Edmonton is half the cost and much bigger. She can also stay with relatives while she looks for a new job and home. She adds that the options for school and childcare are also better.

Unfortunately, the move is going to split up her family.

“My oldest is 12. He wants to stay because his friends and school and life is here,” she says. He will be living with his dad.

“My other middle child is 10 and he wants to come with mom. And I have a little five-year-old that’s just with me.”

Andie calls it very stressful. She earns $3,600 a month in Kelowna as a legal assistant but she suspects she will make that or more in Alberta.

Another woman who answered a question on the Kelowna Moms Facebook page about leaving the Okanagan for somewhere more affordable said her family moved to Edmonton earlier this year.

“We moved in January and bought a house for $332,000. Four-bedroom three-bath 2,700 sqft. Daycare for two kids ages three and one is only $400 a month full-time,” Serena Husel Richardson posted. “My mortgage is cheaper than when we were paying for rent…. Honestly the only thing I miss about Kelowna is the nature… but we will just vacation there as we now have wayyyyy more money to do so!”

It’s not just young families that are leaving.

Kaye and Bob Chisholm of Brainy Bee Honey on Valley Road are returning to Saskatchewan after 22 years in the Central Okanagan.

“We’re going to sell this property and we’re going to move back to Saskatoon. We lived in Saskatoon before we moved here,” says Kaye, who acknowledges they’ll have to get used to Prairie winters again. “It is a known factor. It’s not like we’re going to something we don’t know.”

The exodus to the east is being watched by the Calgary Real Estate Board.

Chief economist Ann-Marie Lurie says they are seeing a shift in migration patterns with people starting to move back from other provinces, although fourth-quarter 2021 numbers still showed Alberta losing more people to B.C. She adds that it will be interesting to see if the first-quarter 2022 stats indicate a change in flow.

Calgary home prices fell along with oil prices nearly a decade ago and slipped even further during the pandemic. They have been climbing back up to 2014 levels in recent months. However, the median single-family home price is still well below Kelowna, at $629,000 in April.

“And we just went above $600,000. We were at $550,000 by the end of last year,” she adds.

Condo prices in Alberta’s largest city have not recovered from the pandemic hit.

“They’re still 10 per cent below where they were, unadjusted for inflation, back in 2014. And you put some perspective on that in price, and our condo prices–sort of like the average resale condo is under $300,000,” explains Lurie.

She notes outlying communities like Airdrie and Cochrane are even more affordable than Calgary. The benchmark price in Airdrie is $480,000 and in Cochrane, it’s $530,000.

Edmonton is also a relative bargain. The average April price for a three-bedroom home was $446,000.

Lurie points out that there has been job growth recently, especially in professional services that tend to come with better salaries, including in the tech sector and in the oil and gas industry.

“Coming from the fact we struggled for so long it is a nice change to see that growth. And we’re finally seeing it impact flows. What we were seeing during the pandemic was people were generally leaving to go to other provinces and we’re finally starting to see a turnaround in that,” she says.

She adds that it’s nice to see Alberta with a bit of an advantage after everything it’s been through.

“We don’t mind having them come back,” Lurie says.

Andie sums up what a lot of people in the Central Okanagan might be feeling right now.

“We pay for the sunshine and beauty here, I guess.”

But for her, that price is now too high.

Source

Bank will be the anchor tenant in last office tower in the ICE District in downtown of Alberta’s capital

Canadian Western Bank (CWB) will move its corporate headquarters into a new 16-storey office tower currently being built in downtown Edmonton.

Chris Fowler, chief executive officer of CWB, told the Real Estate News Exchange the move into the new space of 200,000 square feet will accommodate future growth plans for the financial institution.

CWB will be the anchor tenant in Edmonton’s ICE District’s last available tower that overlooks ICE Plaza. The tower will be named after CWB.

Currently, CWB’s headquarters is in the Canadian Western Bank Place tower at Jasper Avenue and 103rd Street. The company has been in that building since 1995, growing from two floors to 12 floors in about 150,000 square feet.

Fowler said the total bank staff comprises about 2,600, with 1,200 employees in the corporate office in Edmonton.

The tower will include a bank branch on the main floor, a mezzanine lobby and nine floors of CWB office space.

CWB is a full-service financial institution with a focus on the financial needs of businesses and their owners. It was founded 38 years ago by local entrepreneurs and has grown to $1 billion in annual revenue.

ICE District offers many amenities, including restaurants, retail, public plaza, fitness facilities and grocer, 3,000 new underground parking stalls, proximity to LRT, and access to downtown’s pedway network.

Flexible workspaces and fluid design will hallmark the street-level banking centre, second-floor lobby and office floors above, according to CWB.

Designed to LEED (Leadership in Energy and Environmental Design) Gold and WELL Gold Standards, the tower will also maintain a focus on environmentally sustainable building standards.

The vacancy rate for new Class AAA office space in Edmonton’s financial district as of the fourth quarter of 2021 was 11.9 per cent, according to Avison Young, compared to an overall downtown vacancy rate of higher than 17 per cent.

ICE District is the largest mixed-use sports and entertainment district in Canada. ICE District Properties, a mixed-use development surrounding Rogers Place and Ford Hall, is being developed through a Katz Group and ONE Properties joint venture.

Source

Uline leased a 590,906-square-foot built-to-suit warehouse in St. Albert last year as the Alberta industrial market diversifies beyond oil and gas demand.

Rebounding oil and gas markets won’t have the impact on Alberta’s industrial and commercial real estate seen in the past, according to CBRE Ltd.

Diversification in the province’s industrial real estate markets picked up speed during the latest downturn and accelerated during the pandemic. The result is that distribution space, cleantech and other sectors have made for a wider tenant mix, while oil and gas companies are rethinking space demands.

“You’d think with $100 oil, you’d see a massive uptick in office space or a massive uptick in industrial space, but that hasn’t been happening. It’s been the Ulines of the world,” said Dave Young, managing director with CBRE in Edmonton. “You’ve got a lot of different things occurring that are not traditional energy plays.”

Distribution uses are leading the charge. Young can’t remember a time when the Edmonton market was this active, with several large tenants competing for space in a market where vacancies ended 2021 at less than 5 per cent. Net absorption approached 4 million square feet last year and is set to exceed 4.5 million square feet this year.

With strong demand and no meaningful new construction in the pipeline, rents have rebounded past pre-pandemic levels. CBRE expects them to approach $10.60 a square foot this year.

“We see rental rate growth here being a real opportunity for some existing landlords,” Young said. “That will spur some new development in the 2023 range.”

One of the largest deals last year was Uline Inc.’s lease of 590,906 square feet that Quadreal built to suit at Anthony Henday Business Park in St. Albert. OK Tire followed, leasing 196,700 square feet in an adjacent building late last year when it couldn’t find space in B.C.

“The fact that Port of Vancouver is extremely busy, we’re starting to see tenants take a look at Alberta, Calgary and Edmonton,” Young said. “OK Tire has done a deal here as a direct result of not being able to locate space in other markets.”

But don’t discount the oil and gas sector, he warned.

“It’s interesting to see how energy has replaced COVID on the front page of every paper recently,” he said. “But that hasn’t led to a tremendous amount of uptick in new space. They’re doing more with their existing base.”

As oil and gas regains its groove, suppliers to the sector are the ones to watch, he noted.

“A lot of the companies that will service the new developments are benefitting from the higher oil price and taking space,” Young said. “It goes to show you that even with the biggest driver of our economy not taking tremendous amounts of space, and absorption where it is, specifically in the industrial market … markets are maturing, and it’s not just directly related to oil and gas.”

Source

Okanagan centre has seen growth of 13.8 per cent from 2016 to 2021 to more than 144,500 people, latest census data shows

Kelowna, B.C. is officially the fastest growing city in Canada, according to the 2021 census data released February 9 by Statistics Canada.

Census figures show the Kelowna Census Metropolitan Area (CMA) has grown faster over the past five years that any of the other 40 CMAs in the country.

The Central Okanagan region, stretching from Peachland to Lake Country has a population of 222,167 — 14 per cent more than in 2016.

“I’m not surprised at all,” said Loyal Wooldridge, acting mayor of Kelowna and the chair of the Regional District of Central Okanagan.

“Seeing growth of 14 per cent sheds light on just how important it is that we have synergy in growth between our municipalities, because while certain council plan their municipalities or their First Nation, we have to be mindful that residents don’t see those borders.

“That’s why we are going through a regional housing strategy to understand the different OCPs [official community plans] spread across the partners and how that can create more synergies.”

Wooldridge says the unprecedented growth, not only across the region but within each of the six jurisdictions, makes it imperative that housing, transportation and environmental matters are balanced with an eye both regionally and municipally.

Statistically, Lake Country continues to be the fastest growing municipality in the Central Okanagan

Lake Country’s population, 15,817 is 22.4 per cent greater than the last census figures in 2016.

Kelowna, at 144,576, has grown by 13.5 per cent, West Kelowna (36,078) has grown 10.5 per cent while Peachland (5,789) has increased 6.7 per cent.

The City of Kelowna’s desire to move people from the outskirts of town into core areas seems to be working.

According to census figures, the city has the third fastest growing downtown of any CMA.

The downtown core grew by 23.8 per cent, behind only Halifax (26.1%) and Montreal (24.2%).

With a slowing of immigration due to the pandemic, much of the growth seen over the past two years specifically has been a result of migration from other parts of the province and country.

The Kelowna CMA benefited from the fact B.C. was the only western province which saw more people move in from other parts of the country than move out, a net gain of 97,424.

The City of Kelowna has forecast a population closing in on 200,000 by 2040, with 40,000 to 50,000 new residents expected over the next 20 years.

Source

There are about one million job vacancies and slightly more than one million people unemployed as country heads towards a potentially record -low jobless rate

Economic forecasting is a complex business at the best of times, but trying to read the portents of a global economy in recovery from a pandemic has made it even more complicated.

“This is one of the more complex economic environments certainly encountered in my career as an economist,” Douglas Porter, chief economist for BMO Financial Group, said Feb. 1 during a session on financial and commodity markets at the Association of Mineral (AME) Roundup conference in Vancouver.

Generally, the signs are good, though the signals may be complicated somewhat by things economists have not had to factor in for decades, like high inflation and high employment.

One of the biggest stories of 2022 for the economy is going to be employment – high employment, that is, Porter said

“We have a very serious imbalance on the labour market front,” he said. “Right now in the U.S. we’ve got almost 11 million open jobs, whereas the amount of people counted as officially unemployed are less than 7 million.

“So we’ve got way more open jobs than we do have people unemployed. Historically, that kind of imbalance points due north for wages, and we are starting to see wage pressures mount in the U.S.”

In Canada, there are about 1 million job vacancies, though slightly more than 1 million people unemployed.

“We are starting to see wage pressures begin to build in Canada as well,” Porter said.

“We think that, by later this year, we could be looking at the lowest jobless rate that we’ve seen in more than 50 years in both Canada and the U.S.,” Porter said.

Though a global pandemic hasn’t been officially declared over yet, financial markets are operating as though it has., he added.

“Even with the ripple that we’ve seen in equity markets since the start of the year, largely speaking financial markets are still pointing towards relatively robust growth as we go through this year,” Porter said.

Commodities have been on fire since mid-2021, with everything from oil to lumber soaring. High oil prices in particular are helping drive up the consumer price index, and home prices that spiked roughly 20 per cent in the past year in Canada and the U.S. will also feed the inflationary fires.

“This is not just a North American story,” Porter said. “We are seeing strong gains in consumer prices almost across the emerging market and most of the advanced world. Even Japan, which has been looking at deflation, arguably, for about 30 years, is actually seeing inflation of almost 1 per cent, which is relatively high for Japan.”

U.S. inflation rates are among the highest, at 7 per cent.

Benchmark oil prices are well above US$85 per barrel. Porter said he thinks crude oil prices will settle around the US$75 to US$80 per barrel range. Even so, BMO expects inflation to linger longer than some economists initially predicted.

“Even with more moderate oil prices, with an improved supply chain situation, we are still looking at inflation in the range of 2.5 per cent to 3 per cent in Canada and the U.S. by late 2023, well above the sub 2 per cent trend that we were seeing before the pandemic began.

Housing prices will likely continue to add to inflationary pressure, Porter said.

“Even if some of the reopening pressures do fade over the next year, even if oil pressures do stabilize, and even if the supply issues do improve, there is still some sting in the tail from wages and housing that could lead to firmer inflation lasting for some time.”

By Chris Seepe – Source

I recently looked at the government’s substantial revenue stream from investment properties and realized that government has an affordable housing conflict of interest. The more affordable the housing, the less affordable it is to government.

After reviewing the many taxes government places on housing, I have no confidence that anyone in government and any “lettered” people who consult for government will come up with an actionable list that will combat affordability. Landlords must protect themselves against the ever-present onslaught of creative new tax schemes that effectively do only one thing – increase the costs of housing. Here’s how you or your owner-client can improve your property’s affordability:

• Suite-meter everything, especially electricity. Do it yourself. Don’t use a third-party provider. Every dollar you save in utility cost is $20+ of equity.
• Replace old gas appliances. Savings from lower consumption pays reasonably quick returns.
• Never rent or lease hot water tanks. Own them outright. “Peace of mind” lease plans cost three to five times more than replacing end-of-life tanks.
• Some municipalities force you to lease your water meter. They then install a larger-than-needed meter and charge a higher lease rate. Check if a lower volume meter can be used.
• Offer a large incentive (such as four months’ rent) to low-paying tenants to move out. Increasing your rent with a new tenant by, say, $400/month, can add $96,000 equity (at a five-per-cent cap rate).
• Increasing your insurance deductible to perhaps $5,000 may notably reduce your premium, provided all expensive perils are covered.
• Replace all incandescent and fluorescent lightbulbs with LED bulbs, which consume one-sixth the electricity.
• Separate out parking from rent. Why should the tenant benefit from renting out an unneeded parking space? Provide an upscale tenant with two parking spots.
• Maximize coin-op machine laundry fees. A 25-cent increase might increase laundry income 20 per cent or at least defray rising water, electricity and gas costs.
• Apply for an Above Guideline Increase when making a notable capital investment, or if investing for the first time in security features, or if property tax increases notably.
• For some owners, incorporate an “active income” property management company. Pay that company property management fees and expense it in the investment property’s “passive income” to save taxes.
• Maintain a minimum 25 per cent equity. A one-per-cent increase in cap rate could mean a 16-per-cent decrease in property value. A two-per-cent increase in the interest rate may equal a 100-per-cent increase in interest expense and cause your property to negatively cash flow.
• As long as there’s rent control, increase the rent every 12 months by the maximum allowed. Never bypass this opportunity. Not taking 2021’s 1.2-per-cent guideline increase of, say $50/month is a $12,000 equity loss … per tenant.
• Make your mortgage payments on the 10th of each month. This uses the current month’s cash flow to pay the mortgage rather than always maintaining a minimum bank balance to cover late rent payers and those who pay on the first.
• No smokers or pets. Both substantially ruin property value and substantially increase renovation costs with no upside benefit.
• Be zealous in your tenant qualification process. Better vacant than a claimant. Evictions take a year now with no chance of recovering rent arrears.
• Ontario’s Standard Tenancy Agreement is heavily tenant-biased. Add your own clauses. I added 78 clauses.
  Offer an early rent payment discount so that you can charge the “late fee” if they don’t pay on time. Set the “lawful rent” to two per cent above what you want. Then charge the lawful rent amount, not the usual discounted amount if they pay late.
• Don’t “top up” the last month’s rent (LMR) at year-end and don’t the pay interest on that LMR.
  With each vacancy, test the rent rate. Overprice the unit and drop the price weekly until you find the ideal applicant.
• Don’t rent to anyone who’ll stay more than five years. The equity loss from long-term renters is devastating. Rent control wipes out long-term (retirement) investment.
• Can you rent your building wall for advertising? Add a cell tower? Rent an unused garage?
• Don’t rent storage lockers. Convert the space into a rental unit. The income-per-square-foot for a rental unit may be five times higher.
• Don’t allow tenants to use any utility-guzzling appliances unless they’re paying the utility bills.
• Savings from low-volume toilets will pay for the toilets, usually in under three years.
• Insulate hot water tanks and pipes. Savings could be two to five per cent of your bill.
• Install a separate electric hot water tank in every rental unit and connect it to the tenant’s electrical panel. Tenants won’t take half-hour showers.
• Repair running toilets and dripping sinks immediately. One running toilet may double your monthly water bill.
• Investigate solar panels. Cost recovery is less than seven years. Enjoy reduced electricity costs for 30+ years.
• Investigate grey-water use in toilets. Can you channel collected rainwater into the toilet reservoirs? Toilets consume 35 per cent of total home water use.

My operative saying: $1 of NOI (“noy” or net operating income) is $20 of joy (equity increase).