Vancouver Sun

CMHC re­port re­veals bid­ding wars for con­do­mini­ums, big price hikes

- SU­SAN LAZARUK Business · Finance · Canada News · Real Estate · Vancouver · 2010 Winter Olympics · Toronto · Montreal · Edmonton · Calgary · Ottawa

It’s what CMHC is call­ing the “most thor­ough ex­am­i­na­tion of house price pat­terns” ever done of the hous­ing mar­ket in the coun­try’s five largest cities, in­clud­ing Van­cou­ver.

Canada Hous­ing and Mort­gage Corp. on Wed­nes­day re­leased a 225-page re­port called Ex­am­in­ing Es­ca­lat­ing House Prices in Large Cana­dian Metropoli­tan Cen­tres. It was com­pleted to bet­ter un­der­stand how much prices rose be­tween 2010 and 2016 (in Van­cou­ver, a lot), fac­tors that drove the hikes, why the hikes are im­por­tant and what can be done about them.

1. Hous­ing got more ex­pen­sive

House prices jumped 48 per cent be­tween the 2010 Win­ter Olympics and 2016 in Van­cou­ver, the leader in in­creases among Toronto (40 per cent), Mon­treal, Ed­mon­ton and Cal­gary.

CMHC said its anal­y­sis showed de­mand was driven by con­ven­tional eco­nomic fac­tors — a strong econ­omy, grow­ing pop­u­la­tion and low mort­gage rates.

The re­port said be­tween five and 10 per cent of Van­cou­ver’s mar­ket is owned by non-res­i­dent in­vestors.

“For­eign in­vest­ment in­creased de­mand,” said CMHC deputy chief econ­o­mist Aled ab Ior­w­erth.

He also said “The sup­ply re­sponse (to the ris­ing over­all de­mand) has been rel­a­tively weak in Van­cou­ver and Toronto,” but there were “data gaps” that pre­cluded re­searchers from de­ter­min­ing why.

Cal­gary and Ed­mon­ton re­sponded to their de­mand by “sprawl­ing hor­i­zon­tally,” Ior­w­erth said.

2. What were first-time buy­ers buy­ing?

In Metro Van­cou­ver, the study found first-time buy­ers were spend­ing on av­er­age al­most $550,000 on their first homes. That com­pared to $957,000 for buy­ers who weren’t buy­ing for the first time. In Toronto, the amount first-time buy­ers were spend­ing was al­most $595,000 and in Mon­treal it was $308,000.

3. Lots of bid­ding wars

For the first time, CMHC sent out a sur­vey to gauge Cana­dian home­buy­ers’ “be­havioural eco­nom­ics,” or what so­cial pres­sures and in­flu­ences they felt to buy real es­tate.

The ques­tion­naire was sent out to 30,000 home­buy­ers in Van­cou­ver, Mon­treal and Toronto who pur­chased a home in the pre­vi­ous 12 months and it was com­pleted by more than 2,200, enough for a “sta­tis­ti­cally sound anal­y­sis.”

That is, how they’re in­flu­enced to buy (fam­ily and friends was tops, fol­lowed by real­tors, builders, me­dia and gov­ern­ment), how much they think the mar­ket will grow in the short term (not one thought the value of their pur­chase would fall within the first year) and long term (long-term price ex­pec­ta­tions are in line with past mar­ket re­turns) and how will­ing they were to get into a bid­ding war.

It found 53 per cent of buy­ers in the Van­cou­ver mar­ket got in a bid­ding war for their pur­chase (mostly con­dos) and 47 per cent of Van­cou­ver buy­ers paid more for their home than they in­tended.

4. De­mand for in­vest­ment prop­er­ties is up

The re­port also found an in­crease in in­vestor de­mand for con­dos, which has in­creased rentals but the newer units “tend to be more ex­pen­sive than units from ex­ist­ing pur­pose-built rentals.”

Ior­w­erth said “all lev­els of gov­ern­ment” have to work on so­lu­tions to the lack of af­ford­able hous­ing.

The Cana­dian Fed­er­a­tion of Apart­ment As­so­ci­a­tions called for a re­view of tax pol­icy “and how it favours home own­er­ship over rent­ing,” its pres­i­dent, John Dickie, said in a re­lease.

“And sec­ond, (gov­ern­ments must) ad­dress the need for more pur­pose-built rental hous­ing for the peo­ple who can­not af­ford the ris­ing price of home own­er­ship,” he said.

Dickie said Ot­tawa needs to im­ple­ment “fi­nanc­ing al­ter­na­tives, tax re­forms or other in­cen­tives.”

5. Num­ber of fe­males re­port­ing rental in­come rises

In 2010, more males re­ported rental in­come on their tax re­turns, al­though it was just marginally so in Van­cou­ver, with 51 per cent of males re­port­ing rental in­come.

But the growth in the num­ber of fe­males re­port­ing rental in­come rose rapidly be­tween 2010 and 2014, par­tic­u­larly by 28 per cent in Van­cou­ver, ac­cord­ing to CMHC.

The per­cent­age of male tax fil­ers re­port­ing rental in­come in Van­cou­ver dropped to 23 per cent.

“Over­all, the dif­fer­ence in rental shares that ex­isted be­tween male and fe­male tax fil­ers be­fore 2010 had largely dis­ap­peared by 2014,” it said.

 ?? DAR­RYL DYCK/THE CANA­DIAN PRESS ?? The Cana­dian Hous­ing and Mort­gage Corp. re­leased a re­port look­ing at the change be­tween 2010 and 2016 in hous­ing prices and trends in five Cana­dian metropoli­tan re­gions. Among its find­ings, there is high in­vestor de­mand for con­dos, par­tic­u­larly in...
DAR­RYL DYCK/THE CANA­DIAN PRESS The Cana­dian Hous­ing and Mort­gage Corp. re­leased a re­port look­ing at the change be­tween 2010 and 2016 in hous­ing prices and trends in five Cana­dian metropoli­tan re­gions. Among its find­ings, there is high in­vestor de­mand for con­dos, par­tic­u­larly in...

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