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COVID can't stop Burnaby real estate as Metrotown project nearly sells out in 2 weeks – Burnaby Now

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COVID-19 is rampaging through most areas of Burnaby’s economy, especially retail businesses that aren’t appliances or bicycles.

And yet, for several reasons, real estate is booming in Burnaby amid all the pandemic uncertainty.

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Burnaby developer Beedie Living launched the townhome project Kin Collectionin South Burnaby’s Metrotown area that included a “COVID-friendly presentation centre.”

More than 100 homes have already been sold, making the project 80% sold in the first two weeks of sales. The project is the fastest-selling townhouse project of 2020, according to Beedie, and reflects a strong demand for housing.

Indeed, the real estate market in Metro Vancouver had its best September on record this year in terms of the number of homes sold. The Real Estate Board of Greater Vancouver said recently that 3,643 homes were sold last month, up 56.2 per cent from the 2,333 sold in September 2019. Sales were also up 19.6 per cent from the 3,047 homes sold in August.

For the Kin Collection project, approximately half of the buyers have been from Burnaby, said Beedie, with half of those upsizing from a condo to a larger family home.

Burnaby developer Beedie Living launched the townhome project Kin Collection in South Burnaby’s Metrotown area, on Buller Avenue. Beedie rendering

This comes at a time when many people are cutting back on expenditures due to a lack of confidence in the economy due to COVID-19 or because people have been part of a wave of pandemic-related layoffs. 

Sunny Hahm, Beedie Living’s director of marketing strategy, listed several reasons for the fast sales.

Many referenced the pandemic and growing families as reasons for wanting more living space, said Hahm.

“Families are looking for more space, especially post-COVID when much of life revolves around the home experience,” said Hahm. “While some developers are building smaller compact homes, Beedie Living knows that many buyers are looking for more space.”

Hahm said extensive outdoor space, including private balconies and rooftop patios, in addition to the extensive green space around the project and in the public spaces, was the number-one amenity that buyers referenced as vital.

kin beedie
Burnaby developer Beedie Living launched the townhome project Kin Collection in South Burnaby’s Metrotown area, on Buller Avenue. Beedie rendering

“In our post-COVID-19 world, homeowners have put higher values to private and public outdoor amenity spaces,” Hahm said.

Hahm also referenced a lack of townhouse supply in South Burnaby, saying that since 2015, only 230 townhomes have been introduced in this marketplace. 

While a wave of homes hit the Metro Vancouver market last month, it was not enough to keep up with demand and low supply has pushed prices higher, said real estate board chairwoman Colette Gerber.

There were 6,402 properties newly listed for sale in September, up 10.1 per cent from August. But the sales-to-active listings ratio — a key metric used to analyze home prices — was 27.8 per cent, above the 20-per-cent threshold where prices tend to rise.

Gerber says low interest rates and changing housing needs during the COVID-19 pandemic have also influenced the market, which is recovering from a lockdown that slowed sales in the spring selling season.

  • With files from the Canadian Press

 

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Canadian Real Estate Is Becoming More Bubbly According To The US Federal Reserve – Better Dwelling

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The world’s largest central bank is seeing the warning signals for Canadian real estate get brighter. US Federal Reserve (US Fed) updated their exuberance indicators for Q2 2020. Their measures for Canada show recent acceleration over the past two quarters. There was a brief period in the data where it appears Canada almost came back to reality. In the first quarter of this year though, buyer’s became more exuberant. 

Exuberance Is Not A Fundamental

First, let’s quickly run through the concept of exuberance. Exuberance is the state of being excited. When used in economics, it means emotion and excitement is the driving mechanism. If a buyer is said to exuberant, they are buying not based on any fundamental reason – but rather their emotional reasoning. In other words, they’re paying more based strictly on the fact they think they should be paying more. Not because any fundamental basis is driving the valuation higher. 

Exuberance doesn’t mean markets can’t or won’t go higher. Markets driven by an emotional state are more vulnerable to correction though. If buyers aren’t using fundamentals, then a sudden change in emotion means they need to discover the actual price floor. That’s sometimes a ways down.  

Canadian Real Estate Becomes More Exuberant

Canada is seeing exuberance accelerate over the past few quarters. The indicator reached 1.89 in Q2 2020, up from 1.56 during the same quarter last year. The market has seen two consecutive quarters of acceleration. 

Canadian Real Estate Buyer Exuberance

An index of exuberance Canadian real estate buyers are demonstrating, in relation to pricing fundamentals.

Source: Federal Reserve Bank of Dallas, Better Dwelling.

Canadian real estate has been consistently in this level for years, but not as many as some people want you to think. It first breached the critical threshold in Q1 2015, and hasn’t fallen below that level since. There’s been a few periods where it almost has, which have been followed by policy moves to prop up the market. Technically the market has only been exuberant for half a decade. Although that may feel like forever, it’s not really that long. 

The Federal Reserve warns this indicator doesn’t tell us when we’ll see a correction, just the likelihood of one. After 5 quarters above the critical threshold, the Reserve believes markets will require a correction. The longer this trend persists, the further detached the market is from fundamentals. This means a larger correction will be required, whether in terms of falling prices or inflation that kills the real value. 

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Changing The Landscape For Real Estate Brokers And Salespeople In Ontario: Personal Real Estate Corporations – Real Estate and Construction – Canada – Mondaq News Alerts

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Canada:

Changing The Landscape For Real Estate Brokers And Salespeople In Ontario: Personal Real Estate Corporations

To print this article, all you need is to be registered or login on Mondaq.com.

On October 1, 2020, the Government of Ontario announced the
first phase of regulatory changes affecting the Real Estate and
Business Brokers Act
(“REBBA“)
which will soon be renamed as the Trust in Real Estate Services
Act
, 2020 (“TRESA“). These changes
address a number of important issues in Ontario’s real estate
industry. Most notably, the changes allow real estate professionals
to structure their business using a Personal Real Estate
Corporation (a “PREC“).

Personal Real Estate Corporations

As a result of the amendments, real estate brokers and
salespeople regulated by TRESA are now permitted to conduct their
business and pay themselves through a PREC. For many years, a wide
array of regulated professionals have provided services through
personal corporations and enjoyed tax planning and other benefits
associated with personal corporations. Real estate brokers and
salespeople are now among those permitted to use a corporation as a
means to structure their business. Of course, there are a number of
benefits to incorporation and real estate brokers and salespeople
should analyze these with their advisers. However, when considering
the suitability of a PREC, real estate brokers and salespeople
should be aware of the restrictions that apply to this type of
corporation. We summarize the most notable restrictions imposed on
PRECs as follows:

  1. No federal corporations: PRECs must be
    incorporated under Ontario’s Business Corporations
    Act
    ;
  2. Controlling the Board of Directors: The
    corporation may only have one director and that director must be
    the controlling shareholder (a broker or salesperson);
  3. Officer of the Corporation: The corporation
    may only have one officer and that officer must be the controlling
    shareholder (a broker or salesperson);
  4. No non-registered voting shareholders: All of
    the voting shares of the corporation must be owned (legally and
    beneficially) by a broker or salesperson;
  5. Non-voting Shareholders to be Family Members:
    Non-voting shares of the corporation may only be owned by the
    controlling shareholder, by one of its family members, or by
    trustees in trust for one or more children of the controlling
    shareholder who are minors as beneficiaries;
  6. Inability to Limit Sole Director’s Powers:
    There is no agreement or other arrangement that restricts or
    transfers in whole or in part the powers of the sole director to
    manage or supervise the management of the business and affairs of
    the corporation.

For real estate brokers and professionals considering the
benefits of incorporating a PREC, understanding the regulatory
environment in which it will operate is crucial.

Read the original article on
GowlingWLG.com
.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

POPULAR ARTICLES ON: Real Estate and Construction from Canada

Real Estate Double Tax Trap

Goldman Sloan Nash & Haber LLP

Here is an interesting case study I wanted to share regarding potential tax issues during estate planning.

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Danish Plan to Cut Tax Loophole Has Real Estate Funds Worried – BNN

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(Bloomberg) — Real estate investors are trying to figure out how to block a proposal by Denmark to close a legal loophole through which they’ve enjoyed virtually unlimited tax deferrals on value gains.

The plan, which still needs to go through parliament, represents the latest step by Denmark to rein in commercial property companies. The Social Democrat government has criticized the industry, arguing it’s padded its pockets while leaving average residents struggling to pay rent.

“Foreign investors have been able to push back tax payments for eternities and that is of course completely unacceptable,” said Christian Raabjerg Madsen, a member of the parliamentary finance committee for the ruling Social Democrats, and the party’s finance speaker.

Denmark’s government wants to use the extra tax revenue to cover the cost of early retirement for low-wage workers. It’s part of a broader plan whereby money is being moved from the finance industry and over to the country’s blue-collar demographic.

Michael Norremark, a partner at the law firm of Kromann Reumert, whose clients include some of the firms affected by the proposal, says it “effectively is targeted at foreign investors.”

Earlier this year, parliament passed legislation that freezes rent hikes for five years after renovations. The measure was aimed at property speculators and followed explicit government criticism of Blackstone Group Inc.

Blackstone has said in the past that it complied with the law. The firm declined to comment on Denmark’s latest proposal.

A lot of deals in Denmark are structured so that, technically speaking, it’s not the property that is sold but the holding company behind it, Norremark said. As companies are transferred, taxes on property gains get deferred “for quite a long time,” he said.

The plan to close the tax loophole would also affect local real estate firms, according to the Danish Property Federation. Its pitch for a compromise, under which taxes would be paid at the point of sale, was rejected. The group is now lobbying to raise the threshold at which the tax will apply.

“The burdens of the new tax are disproportionately heavier for smaller firms,” Anders Jeppesen, a consultant at the trade group, said.

Denmark’s commercial real-estate market has weathered the Covid crisis better than its Scandinavian peers. Deal volumes in the first half of the year fell much less than elsewhere in the region, according to data compiled by Catella Group, a property investment specialist. Volumes were down 2% in Denmark, compared with as much as 22% in Norway.

©2020 Bloomberg L.P.

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