Year to date, the Canadian dollar is down more than seven per cent against the U.S. dollar.
Historically, when the Canadian dollar is depressed, the country sees an uptick in institutional and individual investment from the U.S., according to Tsur Somerville, senior fellow at the University of British Columbia’s Centre for Urban Economics and Real Estate.
But this time around, foreign investment in B.C. has flatlined, suggesting that currency valuations may not have an impact on real estate at the moment, especially in a market like Vancouver.
According to Brendon Ogmundson, chief economist for the British Columbia Real Estate Association, it is difficult to determine the extent to which any country is investing in the province. But across the board, there has not been an uptick in foreign investment.
Despite what may seem like favourable conditions, there is economic uncertainty as a result of interest rate hikes, said Somerville. In addition, inflation removes the competitive edge that a lower Canadian dollar may provide.
But economic uncertainties are not the only reason foreign investors may see Vancouver as undesirable.
In a statement to BIV, Joo Kim Tiah, CEO of TA Global and the Holborn Group, said that factors such as a small market and population, issues with workforce productivity, high personal taxes and safety issues downtown make Vancouver an uncertain investment.
“When it comes to real estate investment, Vancouver is super idealistic, with the highest standards in the world with regards to sustainability and livability, which we all know cost money, but at the same time, [Vancouver has] been very timid with regards to density.”
According to Tiah, other investment considerations include the time it takes to get permit approvals, and local government bureaucracy.
For many, the foreign buyers tax would also seem like a deterrent. But, according to Tiah, it only acts as a consideration in the sense that it sends the wrong signal to foreigners.
“I mean we are supposed to be an open and welcoming country, and this goes against what Canada is supposed to stand for.… Foreign investors that are looking to strictly invest, would look at other regions or countries that don’t have this.”
But Tiah added that many foreigners don’t invest or buy into Vancouver real estate. The majority of buyers are citizens and residents. ]Ogmundson said that the extra tax tells foreigners that they are not welcome to invest here. He acknowledged that a balance has to be met and that there is such a thing as too much foreign investment.
“But the correct number is not zero, either. There are some times, especially in larger projects when you need to access deeper capital markets and maybe you need to go outside of Canada,” he said.
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.
