The latest data that shows that Metro Vancouver’s commercial real estate sector should be prepping for a full-press recovery in September but the reality on the street paints a different, and troubling, scenario according to the B.C. Real Estate Association, which released second quarter data this week.
The BCREA Commercial Leading Indicator (CLI) rose from 150 to 155 in the second quarter of 2021, representing the fourth consecutive quarterly increase as the economy recovered from the COVID-19-induced recession.
Compared to the same time last year, the index was up by 25 per cent
But Brendon Ogmundson, BCREA chief economist, warns commercial real estate is facing a “very abnormal and uncertain environment.
“Normally, the type of growth we see reflected in the CLI would imply an improvement in demand for retail and office space. However, the complexities of the COVID-19 pandemic and related public health restrictions are driving a wedge between what we see in the data and what is being experienced on the ground,” Ogmundson said.
The arrival of a fourth wave of COVID-19 led to an August 24 return of mandatory masks in all public areas in B.C., reversing a July 1 re-opening of the province.
Provincial health officer Dr. Bonnie Henry announced the reintroduction of the mask mandate, pointing to the alarmingly contagious Delta variant and the significant number of B.C. residents who remain unvaccinated.
The fourth wave has cooled perceptions of workers returning to the office and consumers rushing to retailers for back-to-school shopping.
In early August, Colliers senior managing director Darrel Hurst was predicting that 62 per cent of Vancouver office employees would return to the office after Labour Day,
Ogmundson said it’s now unclear if the need for office space is as strong as predicted and added that there is also a question on the future need for retail space because shoppers increasingly rely on online orders.
Still, the economic data at the end June 2021 looked promising. Overall manufacturing sales rose 5 per cent in the second quarter on higher sales in the wood products, food manufacturing, and chemical products sectors. The economic activity component of the CLI was also positively driven by a 4.8 per cent increase in wholesale trade.
Commercial real estate investment trust unit prices approached all-time records and risk spreads between corporate and government debt continued to narrow, the BCREA found.
Employment in key commercial real estate sectors such as finance, insurance, real estate and leasing increased by about 13,800 jobs in the second quarter, and the office employment component of the index hit an all-time high.
“However, the effect of this strong employment growth on the demand for office space remains unclear as many employees continue to work remotely,” Ogmundson cautioned.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
