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Vancouver Real Estate Sold Fewer Homes Last Month

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Vancouver Real esate new home sales are slowing faster than anyone could have expected. Numbers from MLA Canada, a notable real estate advisory firm, show sales dropped in June. Absorption of new projects is now at a level so low, it’s expected to delay the launch of many new projects.

Real Estate Developers Launched The Fewest Units In Years

Greater Vancouver real estate developers launched the fewest new homes in years. There were 519 new homes launched in June, down 9.26% from the year before. The number of units launched is 29.58% lower than the firm had anticipated last month. This is the fewest number of units launched in two years, and likely much longer. MLA noted developers are now offering longer “preview” periods, testing public interest. The firm anticipates more projects will be delayed, as developers watch absorption trends.

Greater Vancouver New Pre-Sale Real Estate Listings

The number of newly available pre-sale units of new homes across Greater Vancouver.

Source: MLA Canada, Better Dwelling.

Greater Vancouver Sees Fewer Than 75 New Homes Sold

Greater Vancouver real estate developers had an exceptionally slow sales month for launches. An estimated 73 units were sold in June, down 73.4% from last year. This is the weakest number of new launch sales in at least two years of data. The exceptionally low number led to a multi-year low for absorption.

New Homes Had The Weakest Absorption In Years

The absorption of new listings, also known as the sales to new listings ratio (SNLR), fell to a multi-year low. The ratio fell to 14% in June, down 70.83% compared to the same month last year. An SNLR of 60% or higher is a seller’s market, and prices are expected to rise. When the ratio drops below 40%, the market is said to be a seller’s market and prices are expected to fall. Between 40 and 60 percent, and the ratio is balanced. The ratio is one of the indicators that can be used for getting a read on price trends. However, you should combine it with other indicators to get a more accurate picture.

Greater Vancouver New Home Pre-Sale Absorption

The ratio of sales to new listings of pre-sale homes across Greater Vancouver.

*MLA Canada number not available, Better Dwelling estimate based on inference data obtained from MLA.
Source: MLA Canada, Better Dwelling.

Greater Vancouver new home sales are down to a point not seen in recent history. Just over one in ten homes launched are being absorbed, meaning almost 9 homes are going to inventory. If it stays around this level, expect developers to delay even more projects in the near term.

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The Canadian Real Estate Industry Just Jumped The Biggest sales In October over 10 Years

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Canadian real estate markets are on fire. Canadian Real Estate Association (CREA) data shows sales across the country jumped in October. The rise was actually so large, last month was the biggest for the industry in over a decade. This is the opposite of what the government wants to see ahead of rolling out new demand stimulus.

Canadian Real Estate Sales Rise Over 12%

The headline number used by the industry is seasonally adjusted, which downplayed growth. There was 42,970 seasonally adjusted sales in October, flat from a month before. Unadjusted however, sales reached 44,499 in October, up 12.9% from the same month last year. FYI seasonally adjusted numbers are compared using consecutive periods. Unadjusted numbers are compared on a year-over-year basis.

Canadian Real Estate Sales

The unadjusted sales for all home types, as reported through the Canadian MLS.

Source: CREA, Better Dwelling.

The growth rate is very high, and this is also a new record. The 12-month growth is the highest for October since 2011. The number of sales reported for the month is also the highest since 2007. Some of this is delayed demand from last year’s weak numbers, but it’s still a very large month.

Canadian Real Estate Sales Change

The annual percent chage of unadjusted sales for all home types, as reported through the Canadian MLS.

Source: CREA, Better Dwelling.

British Columbia’s Largest Markets Lead In Growth

The largest growth was in last year’s biggest losers – Vancouver and Fraser Valley. Vancouver reported 2,892 sales in October, up 45% from the same month last year – the biggest jump in the country. Fraser Valley, the neighboring board, followed with 1,500 sales, up 36% from last year. In a distant third was Ottawa at 707 sales, up 25.4% from last year. Both BC markets were near multi-year lows last year, so the jump was a little expected.

Canadian Real Estate Sales By Market

Canadian real estate sales in markets with more than 450 sales in the month.

Source: CREA, Better Dwelling.

Biggest Losses Were In… Wait, There Was None

That’s right kiddos, not one major market showed a loss from last year. Kitchener-Waterloo showed the smallest gain at 502 sales in October, up 2.7% from last year. London follows with 924 sales, up 2.8% from last year. Victoria came in third with 586 sales, up 5.4% from last year.

Canadian Real Estate Sales Change By Market

The percent change in Canadian real estate sales, in markets with more than 450 sales in the month.

Source: CREA, Better Dwelling.

All of Canada’s largest real estate markets pumped out massive gains. Curiously, the rise in sales is not isolated to “hot regions,” it’s a broad market gain. This implies a more macro change to buyer pressure.

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Real estate developers are slow to make buildings 5G-enabled

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Super fast 5G cellular networks are hot as major wireless carriers from Verizon to AT&T deploy the service, but it’s unclear if the infrastructure is in place for in-home 5G to replace current cable-based broadband.

The 5G-enabled future seems kind of distant. Real estate developers would need to put fiber-optic cables in homes and office buildings, since 5G doesn’t pass through walls, windows, or people. And most developers are not constructing projects or retrofitting existing properties that would allow 5G to be delivered to homes because it’s simply too expensive to implement.

“Not many developers that we speak to are taking 5G into account when constructing new ground-up developments,” said Chen Konfino, founder of Younity, a Tel Aviv-based company that installs internet infrastructure in multifamily buildings.

<p class=”canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm” type=”text” content=”Fiber-optic cables, which run through the walls and the floors of buildings, are required to receive 5G signals indoors, according to Dan Littman, principal of technology, media and telecommunications at&nbsp;Deloitte Consulting LLP. And only some developers like The Related Companies are willing to pay for the infrastructure. Related’s massive Hudson Yards 28-acre mixed-use development in New York City is wired for 5G.” data-reactid=”18″>Fiber-optic cables, which run through the walls and the floors of buildings, are required to receive 5G signals indoors, according to Dan Littman, principal of technology, media and telecommunications at Deloitte Consulting LLP. And only some developers like The Related Companies are willing to pay for the infrastructure. Related’s massive Hudson Yards 28-acre mixed-use development in New York City is wired for 5G.

Shot of a young businessman looking bored while working at his desk during late night at work

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Most builders just opt for traditional internet solutions because it’s affordable. Between conduits, splices, cables, and installation, 5G capability can be a five- or six-figure investment. Source: Getty Creative.

Installation is too pricey” data-reactid=”39″>Installation is too pricey

Most builders just opt for traditional internet solutions because it’s affordable. Between conduits, splices, cables, and installation, 5G capability can be a five- or six-figure investment.

From 2003 to 2017, the median budget for a fiber-optic cable installation project, ranging from .6 to 10 miles of cable, was $66,940, according to a U.S. Department of Transportation&nbsp;survey&nbsp;of 150 fiber optic installations. Konfino said he recently completed two fiber-optic cable installations in 30- to 40-foot buildings for about $100,000 each.” data-reactid=”41″>From 2003 to 2017, the median budget for a fiber-optic cable installation project, ranging from .6 to 10 miles of cable, was $66,940, according to a U.S. Department of Transportation survey of 150 fiber optic installations. Konfino said he recently completed two fiber-optic cable installations in 30- to 40-foot buildings for about $100,000 each.

Even retrofitting existing buildings is a pricey endeavor. It costs about 30% more than a regular renovation, taking into account demolition, renovation, and improved telecommunication closets, said Konfino. And the costs skyrocket when a building is more than a mile away from the closest fiber-optic internet line, according to a&nbsp;post&nbsp;by Atlantech, a Maryland-based fiber optics and telecommunications company.” data-reactid=”42″>Even retrofitting existing buildings is a pricey endeavor. It costs about 30% more than a regular renovation, taking into account demolition, renovation, and improved telecommunication closets, said Konfino. And the costs skyrocket when a building is more than a mile away from the closest fiber-optic internet line, according to a post by Atlantech, a Maryland-based fiber optics and telecommunications company.

Large scale development projects are underway on the far west side of Manhattan near 34th Street and the Hudson River. This high angle view above Ninth Avenue looks south toward Manhattan West and Hudson Yards, two of the large development projects. Seen in the background are the Hudson River and Jersey City. Also seen in the foreground are access roads to the Lincoln Tunnel.Large scale development projects are underway on the far west side of Manhattan near 34th Street and the Hudson River. This high angle view above Ninth Avenue looks south toward Manhattan West and Hudson Yards, two of the large development projects. Seen in the background are the Hudson River and Jersey City. Also seen in the foreground are access roads to the Lincoln Tunnel.

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Large scale development projects are underway on the far west side of Manhattan near 34th Street and the Hudson River. This high angle view above Ninth Avenue looks south toward Manhattan West and Hudson Yards, two of the large development projects. Source: Getty Creative.

The return on investment” data-reactid The return on investment

As one of the few developers making 5G-enabled properties like Boston’s Lovejoy Wharf luxury condominiums and New York City’s Equinox Hotel, Related said the high costs are worth the investment.

“Expense is always a factor. We would never mindlessly invest in infrastructure that we didn’t think would be foundationally important,” said Scott Evans, chief digital officer of Related. Fiber-optic cables will only become increasingly necessary as the infrastructure behind future innovations, added Kenneth Finnegan, chief technology officer of Related.

Fiber broadband cuts down on long-term maintenance costs for building owners. It also allows owners to charge more rent and increases the value of properties. According to&nbsp;Connected Real Estate Magazine, owners can increase rent by an average of 8% and property values are boosted by an average of 2.8%, if the properties are 5G-enabled.&nbsp;” data-reactid=”66″>Fiber broadband cuts down on long-term maintenance costs for building owners. It also allows owners to charge more rent and increases the value of properties. According to Connected Real Estate Magazine, owners can increase rent by an average of 8% and property values are boosted by an average of 2.8%, if the properties are 5G-enabled.

“I think there’s going to be a price concern for landlords and property owners, but I think there will be a demand for this infrastructure,” said Mike Baumstein, deputy head of Barings’ Private Equity and Real Assets team, an investment firm that recently bought Gigasphere, a fiber-optic telecommunications company serving the multifamily and commercial real estate industries. “Eventually, they [building owners] will have to make an investment to keep their properties updated and competitive.”

But smaller developers still say the cost is too high. Josh Schuster at New York-based Silverback Development uses traditional methods like routers and cell phone repeaters that allow only 4G into buildings, according Schuster.

“There is a cost-benefit analysis. Right now, there are inexpensive ways to include technology in design and construction,” he said. “We definitely incorporate that.”

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Kelowna named best city for real estate investment

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Kelowna is the best city for real estate investments in Western Canada.

That’s according to Western Investor, a source for commercial real estate and business opportunities in Western Canada.

Kelowna is Canada’s 53rd most populous city but has the 10th busiest airport, which the Western Investor said is a “telling” statistic that it’s a growing city and the reason why it called it the best.

The report noted two new hotels at the airport, as well as construction of new commercial and residential buildings in the downtown area.

The buildings include the One Water Street condo tower and the Ella Tower. In total, there are 12 residential towers under construction in the city.

The source also pointed out Kelowna has a 4.9 per cent office vacancy, with more office spaces under construction.

“It’s gratifying to see the city’s long-term vision for this area becoming a reality,” Mayor Colin Basran said.

“The mixture of commercial, industrial and residential properties create a dynamic and attractive hub of development where people can work, live and enjoy leisure time all in one spot.”

Other B.C. cities named in the top five include Prince George and Chilliwack.


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@twilamam
twila.amato@blackpress.ca

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