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Canadian Real Estate Prices To Fall Up To 26%, Bay Street Firm Warns Institutions – Better Dwelling

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Canadian real estate prices may take a big tumble, Bay Street researchers warn. Veritas Investment Research, a prominent Canadian firm, sent institutional clients a real estate forecast. The firm warned real estate price declines are unlikely, except in the event of supply shock. They now believe supply shock may arrive soon, and can send prices up to 26% lower.

About The Numbers

Veritas’ analysis is geared to investment managers, so it’s different from a bank forecast. The firm used regression analysis in its conclusion with various risk scenarios. They concluded months of inventory has the highest correlation with prices. Recently, the market has been tight, sending prices higher during a recession. They believe that’s about to change when mortgage deferrals expire, and things get back to “normal.” 

The firm’s model is based on a percent of mortgage payment deferrals turning into inventory. They gave scenarios for 5%, 10%, or 15% of homeowners with deferrals turning into sellers. This isn’t the same as assuming they’ll default. While some people will default, you typically never default if you can sell first. Canada’s tight housing supply means most people can do that, instead of defaulting. This is a point the CMHC has recently made as well, so it’s not an outlandish assumption. It’s actually an ideal scenario.  

We should also first add, they warned clients about the uncertainty during the pandemic. Since pretty much nothing has been predictable, they’re advising clients to watch the months of inventory closely. In other words, do your own due diligence, but this is what they’re watching for and expect at this time. 

Canadian Real Estate Prices To Drop Up To 11%

Canadian real estate prices are expected to make modest to substantial declines. The firm’s model suggests potential price declines between 4 and 11 percent. As stated before, this is based on the assumption inventory will rise as a result of deferrals turning into listings. This doesn’t include additional supply, which Canada is currently building records amounts of, and is often flipped back into resale markets. 

Toronto Real Estate Prices May Drop Up To 26%

Toronto real estate has the largest dive in the forecast. The firm expects a potential price drop between 15 and 26 percent. For the regional models, they assumed a distribution of deferrals was similar to that of all real estate markets. However, CMHC deferral data shows Toronto may be overrepresented in the deferrals

Vancouver Real Estate Prices To Drop Up To 17%

Vancouver real estate’s prices are forecasted to make a smaller drop than Toronto. The firm sees a potential price drop between 10 and 17 percent. They are once again assuming a proportional distribution of deferrals. Worth mentioning, the CMHC also forecasted smaller price declines for Vancouver as well. However, their numbers didn’t show as quick of a recovery for prices as Toronto. 

The firm expects this price movement around six months after the inventory increase. The timeline puts it fairly close to when the CMHC has been forecasting. The forecast is a little more aggressive than those of banks and other vested interests. However, it’s similar to what other institutional risk advisory firms have forecasted. It’s also similar to Canada’s state-backed mortgage insurer. 

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Vancouver real estate: $2.5 million townhouse along Choklit Park, former home of Purdys, sells over asking price – The Georgia Straight

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For its location and views, it’s not suprising that this Vancouver townhouse beats a lot of single-family homes in price.

These also likely explain why the strata property at 1089 West 7th Avenue didn’t stay long on the market.

As well, the property sold over its listing price, when a buyer picked it up for $2,505,000.

The Fairview Slopes townhouse is located along a storied and unique green space, Choklit Park.

The 0.07-hectare park is associated with the legacy of Purdys chocolates.

“This site was formerly the location of the Purdy’s Chocolate factory, hence the name!”, according to the online parkfinder from the City of Vancouver.

The park is “tucked into a steep slope”, and comprised by a “series of steps and terraces with a beautiful collection of trees and shrubs”.

“Although tiny, the park is expanded with its views to False Creek and downtown,” the city notes.

Purdy’s made chocolates from 1949 until 1982 at what is now Choklit Park. Sold property indicated by red mark.
GOOGLE

The Vancouver Heritage Foundation recalls online that Charles Flavelle, owner of Purdys, said that the choklit spelling was suggested by one of the “hippie” carpenter crew that built the park.

“That’s the way a kid would spell it,” Flavelle was reportedly told.

The heritage association reproduced online the plaque recalling the history of the park:

Charles Flavelle of Purdy’s Chocolates created Choklit Park in 1970 on the unused Spruce Street right-of-way at 7th Avenue, using a crew of six hired on an “Opportunities for Youth” grant. The chocolate factory at 1107 W. 7th needed an improved truck-loading facility and the children in the neighbourhood needed an adventure playground. The crew used the right-of-way and all the available space around the factory for the children’s park. Purdy’s made chocolates here from 1949 until 1982.

Purdys Chocolatier moved to Kingsway in East Vancouver, where it continues to make and sell chocolates.

Engels and Volkers Vancouver listed 1089 West 7th Avenue on November 24, 2020, for $2,298,000.

After six days on November 30, the townhouse sold for $2,505,000 or $207,000 over its original asking price.

The transaction was tracked by fisherly.com, an online real-estate information site.

The home features two bedrooms and three baths.

The listing describes it as an “architectural oasis that will capture those in search of privacy, beauty and incredible views”.

The three-level concrete and brick townhouse includes three private decks, including one on the rooftop, which offer “panoramic city views”.

“Large master retreat includes rare solarium, perfect art studio/office/shop + custom closets,” the listing adds.

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Vancouver real estate: Shift on to big corporate landlords of apartment buildings

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Article content continued

Goodman describes the market as being balanced between the supply of and demand for listings, even though he is seeing more rental buildings for sale than in the past.

“While private investors made up the majority of vendors and purchasers in the first half of 2020, real estate investment trusts, or REITs and institutions are likely to increasingly emerge as buyers, particularly on larger deals, in the back half of the year and into early 2021,” according to a fall 2020 report by Avison Young.

Rental apartment buildings are seen as a very attractive and reliable investment for REITs and other financial companies in these uncertain times, said John Bunting of PwC Canada’s B.C. region real estate practice.

“It’s called (investing in) ‘beds and sheds,’ or the first basic needs of safety, security, shelter and food,” he said.

Bidding opened Monday for a package of 10 apartment buildings, with over 400 rental suites across Vancouver.

A family-run, Vancouver-based company, Hollyburn Properties Ltd., is selling these properties, which it has owned for decades. They make up almost a third of the 33 multi-family, rental buildings it owns in the Vancouver area.

Lance Coulson of real estate broker CBRE, which has the listing, and Hollyburn spokesperson Olivia Brown did not respond to questions and there is no publicly listed asking price.

Coun. Jean Swanson had a motion on the agenda for Vancouver city council last week, which mentioned the Hollyburn listing, picking it as an example of “a portfolio that could be attractive to REITS” because of its large number of buildings and units and its likely higher dollar value, she said.

Source: – Vancouver Sun

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Vancouver real estate: $2.5 million townhouse along Choklit Park, former home of Purdys, sells over asking price – The Georgia Straight

Published

 on


For its location and views, it’s not suprising that this Vancouver townhouse beats a lot of single-family homes in price.

These also likely explain why the strata property at 1089 West 7th Avenue didn’t stay long on the market.

As well, the property sold over its listing price, when a buyer picked it up for $2,505,000.

The Fairview Slopes townhouse is located along a storied and unique green space, Choklit Park.

The 0.07-hectare park is associated with the legacy of Purdys chocolates.

“This site was formerly the location of the Purdy’s Chocolate factory, hence the name!”, according to the online parkfinder from the City of Vancouver.

The park is “tucked into a steep slope”, and comprised by a “series of steps and terraces with a beautiful collection of trees and shrubs”.

“Although tiny, the park is expanded with its views to False Creek and downtown,” the city notes.

Purdy’s made chocolates from 1949 until 1982 at what is now Choklit Park. Sold property indicated by red mark.
GOOGLE

The Vancouver Heritage Foundation recalls online that Charles Flavelle, owner of Purdys, said that the choklit spelling was suggested by one of the “hippie” carpenter crew that built the park.

“That’s the way a kid would spell it,” Flavelle was reportedly told.

The heritage association reproduced online the plaque recalling the history of the park:

Charles Flavelle of Purdy’s Chocolates created Choklit Park in 1970 on the unused Spruce Street right-of-way at 7th Avenue, using a crew of six hired on an “Opportunities for Youth” grant. The chocolate factory at 1107 W. 7th needed an improved truck-loading facility and the children in the neighbourhood needed an adventure playground. The crew used the right-of-way and all the available space around the factory for the children’s park. Purdy’s made chocolates here from 1949 until 1982.

Purdys Chocolatier moved to Kingsway in East Vancouver, where it continues to make and sell chocolates.

Engels and Volkers Vancouver listed 1089 West 7th Avenue on November 24, 2020, for $2,298,000.

After six days on November 30, the townhouse sold for $2,505,000 or $207,000 over its original asking price.

The transaction was tracked by fisherly.com, an online real-estate information site.

The home features two bedrooms and three baths.

The listing describes it as an “architectural oasis that will capture those in search of privacy, beauty and incredible views”.

The three-level concrete and brick townhouse includes three private decks, including one on the rooftop, which offer “panoramic city views”.

“Large master retreat includes rare solarium, perfect art studio/office/shop + custom closets,” the listing adds.

More

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