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Multifamily Housing Completions to Surge in 2018

Housing affordability is fundamentally linked to the relationship between the housing stock and market demand. Strong economic growth has created rising labour demand and consumer confidence side effects, while net migration and a wave of millennials entering their household-forming years have rounded out a “perfect storm” of demand-side momentum. In turn, the supply of resale homes on the market in Metro Vancouver has plunged to decade lows. This has led to continuing upward pressure on
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Fixed-Term Leases BREAKING NEWS!!

VICTORIA – The provincial government has introduced legislation to close a major loophole in fixed-term leases and improve the rights of renters throughout British Columbia, Municipal Affairs and Housing Minister Selina Robinson announced today.

Robinson says the new legislation will mean landlords can no longer use the loophole to bypass annual rent control, meaning renters will now be protected against massive rent hikes at the end of a lease.
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Mortgage Underwriting Changes

OSFI Announcement of Change to Mortgage Underwriting – October 17, 2017

The Office of the Superintendent of Financial Institutions (OSFI) announced new restrictions on uninsured mortgages today. Effective January 1, 2018, all home-buyers with a down-payment of more than 20 per cent will have to qualify at the higher of the posted 5-year qualifying rate and their contractual rate plus 200 basis points (2 per cent).  This is in addition to policy announced in October of 2016 that required all insured borrowers qualify at the posted 5-year qualifying rate. 

In addition to the new stress test for uninsured mortgages, OSFI is also requiring lenders to establish and adhere to appropriate loan-to-value limits reflective of risk and the current economic environment and is prohibiting s lending arrangements designed to circumvent loan-to-value limits such as combing mortgages with other lending products. 

These new residential mortgage underwriting requirements will apply to all Federally regulated financial institutions.
The impact of the new stress test requirement will be to lower the purchasing power of households by up to 20 cent. Like past tightening of mortgage regulations, we anticipate that the market impact will be sharp but temporary. In the past, we have seen home sales decline in the 3 to 9 months following the implementation of tighter mortgage lending standards, with the severity of the impact fading within one year.  However, these new regulations impact a larger pool of mortgages and so the impact could be more significant than in the past.
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Lift-Off: Mortgage Interest Rates Forecast 2018

Mortgage Interest Rates Outlook

Since the second quarter forecast, projected rise in mortgage interest rates has occurred and accelerated, as the Bank of Canada — spurred by economic growth that far exceeded its outlook — turned suddenly hawkish. The Bank surprised with a 25-basis point increase in July and then again in September, taking its overnight rate back to 1 per cent, where it was before the precipitous drop in oil prices that shocked the Canadian economy in 2014.
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Canadian Housing Starts – September 11, 2017

Canadian Housing Starts – September 11, 2017

Canadian housing starts increased 1 per cent in August to 223,232 units at a seasonally adjusted annual rate (SAAR). The six-month trend in Canadian housing starts was also higher at 219,447 units SAAR.

New home construction in BC fell 21 per cent on a monthly basis to a still robust 35,773 units SAAR but were up 4 per cent on a year-over-year basis.
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BC Commercial Leading Indicator Surges Higher

The BCREA Commercial Leading Indicator (CLI) posted its largest increase since 2009, rising by 3.7 index points in the second quarter of 2017 to 133.1. That increase represents a 2.8 per cent rise over the first quarter and a 6.6 per cent increase from one year ago.

The sustained rise in the CLI reflects strong growth in economic sectors beneficial to commercial real estate activity. An uptick in economic activity last quarter further reinforces the already strong trend in the CLI. That signals a continued economic environment that is very supportive of growth in investment, leasing and other commercial real estate activity over the next two to four quarters.

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Bank of Canada Interest Rate Decision – September 6, 2017

Bank of Canada Interest Rate Decision – September 6, 2017

The Bank of Canada interest rate decision was announced this morning. Bank of Canada is raising its target for the overnight rate by 25 basis points to 1 per cent. In the press release accompanying the decision, the Bank noted that recent economic data have been stronger than expected but growth is forecast to moderate in the second half of the year. On inflation, the Bank cited some excess capacity and temporary price shocks as factors keeping inflation below its 2 per cent target. Importantly, the Bank mentioned it will be paying particular attention to the evolution of the economy’s potential growth rate (meaning the economy’s estimated long-run growth rate) as well as to labour market conditions and the economy’s sensitivity to higher interest rates.
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The History of Rental Increase

Every year in British Columbia the Residential Tenancy Branch makes an announcement about the maximum annual rental increase in the province.  Landlords may only increase the rent 12 months after the date that the existing rent was established with the existing tenant(s) or 12 months after the date of the last legal rent increase, even if there is a new landlord or a new tenant by way of an assignment.  Landlords must provide tenants with three full rental months’ notice of a rent increase.

Once a year, the landlord may increase the rent for the existing tenant.
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Canadian Housing Starts – August 9, 2017

Canadian Housing Starts – August 9, 2017

Canadian housing starts increased 4 per cent in July to 222,324 units at a seasonally adjusted annual rate (SAAR). The six-month trend in Canadian housing starts was also higher at 217,550 units SAAR.

New home construction in BC was one of the main contributors to the overall increase in Canadian housing starts. Total housing starts in BC increased
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Canadian Renters vs Owners

When it comes to Canadian renters vs owners, Canada is growing (in case you hadn’t noticed).  Population and number of households have been gradually increasing over the years.  Yet through all this change, the one thing that has remained stable are the rates of home ownership among Canadians.

According to Statistics Canada, the number households in Canada increased
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