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Vancouver real estate: home prices rise in August as sales in region top historical average by 20 percent – Straight.com

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Homes in Metro Vancouver became more expensive yet again.

The Real Estate Board of Greater Vancouver reports that the benchmark price of all homes rose in August 2020 as sales exceeded historical records for the month.

The board stated in a new report that the price of a typical home in the region increase by 5.3 percent last month compared to August 2019.

August 2020 prices also topped prices in July this year by 0.7 percent.

The composite benchmark price of all homes in Metro Vancouver reached $1,038,700.

On the east side of the city of Vancouver, the price of a typical home rose to $1,109,500, a 1.6 percent increase over July.

On the west side of Vancouver, the price went up to $1,291,100, or an increase of 0.9 percent.

The REBGV also reported that the number of homes sold in the region last month exceeded the 10-year August sales average by 19.9 percent.

Realtors sold 3,047 in August 2020.

This means that nearly 100 homes were purchased each day last month.

The number represents a 36.6 percent increase from the 2,231 sales in August 2019.

However, last month’s deals show a 2.6 percent decrease from the 3,128 homes sold in July 2020.

The REBGV covers Vancouver, Burnaby, Coquitlam, New Westminster, North Vancouver, Port Coquitlam, Port Moody, Richmond, South Delta, Maple Ridge, Pitt Meadows, Squamish, Sunshine Coast, West Vancouver, and Whistler.

In the board’s report Wednesday (September 2), REBGV chair Colette Gerber stated that low interest rates and limited supply of homes for sale are “creating competition in today’s housing market”.

Gerber shied away from speculating about prospects in the coming months in light of the pandemic.

“Like everything else in our lives these days, the uncertainty COVID-19 presents makes it challenging to predict what will happen this fall,” Gerber said. 

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Office real estate market will get back to pre-Covid level, in 2025: Cushman & Wakefield – CNBC

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The coronavirus remote work experiment will become a permanent trend, but at some point, employees will return to the office in numbers that match the past. When? It could take five years, according to a new forecast from Cushman & Wakefield.

Global office vacancies will not return to their pre-Covid peak levels until 2025 and, in all, a net 215 million square feet of office vacancy will have been lost due to the pandemic, according to the outlook from one of the largest real estate services firms in the world. Between Q2 2020, when Covid-19 hit the U.S., and Q3 2021, the net negative office square feet damage will reach 95 million square feet, roughly 10 million square feet more than the financial crisis trough.  

The situation will be the worst in the West. During the financial crisis, Canada, Europe and the U.S. recorded a combined loss of 120.5 million of square feet occupancy from peak-to-trough. Including Q2 2020, that will reach over 200 million square feet of “negative absorption” peak-to-trough in the Covid recession, according to Cushman & Wakefield’s analysis.

Work from home is ‘very real’

“We know this work from home trend is very real,” Kevin Thorpe, the firm’s chief economist, recently told CNBC.

For the study, Cushman & Wakefield surveyed some of largest companies around the world about the future of the office, and attempted to measure both the cyclical impacts of the Covid recession and structural impacts assuming a higher increase in work from home. 

Thorpe said two key findings emerged. First, office leasing fundamentals will be significantly impacted and vacancies reach an all-time high. But the second find is more encouraging: the office real estate market will fully recover, according to Cushman & Wakefield, largely due to employment growth and the ongoing shift in the U.S. economy’s concentration in certain types of professional jobs. 

Vacancies caused by Covid-19 will result in over 200 million of net negative square footage in the office real estate market, but the growth of professional services sector jobs will help lead to a recovery over five years, says Cushman & Wakefield.
Thomas Barwick | Getty Images

In all, the real estate firm estimates that 82% of the damage will be related to cyclical factors: permanent office job losses and the rise of coworking, while 18% is related to structural factors: primarily assumptions about permanent remote workers and hybrid workers — those who work remotely some of the time.

Work from home will double, and hybrid workers will increase. The study estimates that the share of people working permanently from home in the U.S. and Europe will increase from roughly 5-6% pre-Covid-19 to between 10% and 11% post-Covid, while the share of hybrid — also referred to as agile workers — will increase from between 32% to 36% to just under half of all workers.

Levi Strauss & Co. CFO Harmit Singh recently told a CNBC @Work virtual event that it pulled the plug on any new commercial real estate during the crisis. “The myth that work from home is not productive has been busted,” the Levi Strauss CFO said. “I believe we will settle into a culture where working from anywhere will be the new norm, with work from home or office or a hybrid arrangement.”

Google recently announced it will try a hybrid model of work as most of its employees do not want to be in the office every day.

Many younger workers are taking advantage of the Covid remote working shift to travel, embracing a “digital nomadic” lifestyle, a shift which could become permanent for a new generation of labor.

Over time, as economy shifts to a knowledge-based, professional services economy, it will offset the flexible workforce trend, Cushman & Wakefield’s study concludes. “But in the near-term, there will be significant challenges for the office sector,” Thorpe said. 

Many workers still do not feel safe enough to return to office. One study found that only 14% of workers said that they trust their CEOs and senior managers to safely lead them back to work. 

Global office vacancy will rise from 10.9% pre-Covid crisis to 15.6% by Q2 2022, the study forecasts.

Some of the largest companies in the world have been expanding office space in major cities, such as New York, during the crisis.

Facebook, which has been acquiring New York real estate for years, agreed last month to a major lease at the old James A. Farley post office building in Manhattan. Amazon has also purchased the Lord & Taylor building on 5th Avenue, and that is even though Facebook CEO Mark Zuckerberg has said as much as half of the company’s workers may be remote in the future. In March, just as the Covid crisis hit the U.S., Amazon paid over $1 billion to acquire tha Lord & Taylor building in New York, which includes over 600,000 square feet of space.

A new analysis from Cushman & Wakefield estimates that work from home will double across the globe in the next five years with the largest share in the West.
Cushman & Wakefield Research “Global Office Impact Study and Recovery Timing”

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Appraisal data shows scale of value destruction in US real estate – Financial Times

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Commercial properties hit by the economic effects of coronavirus could have lost as much as one-quarter of their value or more, laying bare the scale of the damage being wrought across American malls, hotels and other commercial buildings.

Evidence emerging in the commercial mortgage-backed securities (CMBS) market from recent appraisals also raises questions over the value of the collateral backing commercial mortgages throughout the financial system.

Properties that have gotten into trouble are being written down by 27 per cent on average, data from Wells Fargo shows. New appraisals are triggered when a commercial property owner starts to have trouble paying the mortgage, and the loan is handed to a “special servicer” that could eventually seize the property on behalf of CMBS holders.

“It’s a big number,” said Lea Overby, an analyst at Wells Fargo. “This is material.”

Recent examples show hotels being especially hard hit, given the collapse in tourism and business travel. A Crowne Plaza hotel in Houston was valued at $25.9m this month, down 46 per cent from when it was bundled into a CMBS deal in 2014. The hotel, which sits just off the Katy Freeway has not paid its mortgage since March and was transferred to the special servicer in May. 

The Holiday Inn La Mirada, about 20 minutes drive from the centre of Los Angeles, was recently valued at $22.1m, down 27 per cent since it was securitised in 2015, having not paid its mortgage since April. Another Holiday Inn in Columbia, Tennessee, had its appraised value cut by 37 per cent this month to $7.7m.

“The numbers themselves are atrocious,” said Gunter Seeger, a fixed income portfolio manager at PineBridge Investments. “A 30 per cent markdown in appraisals pretty much across the board is horrific.”

The number of new appraisals is accelerating. The Wells Fargo analysis covers 116 struggling properties bundled into CMBS that have had new appraisals since April 1 — 68 of them this month.

Of the total, 75 of the mortgages were backed by hotels while 26 were retail properties, whose tenants have been struggling under lockdown-enforced closures and economic weakness.

Banks have been raising provisions to cover potential real estate losses this year, and the number of commercial real estate loans in US bank portfolios that were flagged as being potentially problematic spiked in the second quarter.

Meanwhile, CMBS investors have been keeping an eagle eye on appraisal values to gauge their risk of losses. Over the past four years, the average loan-to-value ratio on mortgages bundled into CMBS has been below 60 per cent, giving investors a sizeable cushion, even if a property has to be seized and sold for the loan to be repaid.

Coronavirus has substantially eroded that cushion, however, and loan-to-value ratio in the average multi-property CMBS is now almost 90 per cent.

“The longer this crisis goes on, we will move into a valuation problem,” said James Shevlin, president of special servicer CW Capital. “It absolutely concerns us but right now I still think we are covered.” 

New appraisals are an early step taken by special servicers and help them assess how much time to offer borrowers to resolve their difficulties before they start foreclosure proceedings.

Special servicers and analysts said that it can be challenging to accurately appraise a property in the current environment. The potential sale value over the next few months could be heavily affected by another uptick in coronavirus cases, more stringent rules governing travel and people’s ability to go outside, or even a volatile presidential election. Equally, property values could appreciate if the economic recovery gathers speed. 

“It’s someone’s best estimate of value,” said Alan Todd, an analyst at Bank of America. “Right now there is so much uncertainty. There could be a very high margin of error.”

Additional reporting by Robert Armstrong

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LACKIE: Real estate market going through 'recalibration' of supply, demand – Toronto Sun

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Article content continued

Buyer confidence is always the wild card. We have seen this time and time again, but most recently in the early days of the pandemic: the market ground to a halt and the buyers brave enough to venture out were looking for deals.

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That momentary seize up was a blip, it turned out. Once people realized that the pandemic discounts weren’t holding, the market fired back up again.

If you look at the actual TRREB data, as Ackerley did, you will see that in spite of new listings more than doubling since Sept. 1, the number of sales once averaged out to account for the wild summer has stayed relatively consistent.

So, the main thing to watch now is what happens with the inventory balance on the condo market. We need to see how long it takes for this surge of new listings to slow and eventually absorb.

“It’s true the landscape is different, but rest assured, this market is very strong for many reasons, increased population, diverse economy, stable political system, etc. The market is going to rebound. This sort of thing has happened so many times in the past where something causes the market to stall, the media scares everyone, then there’s a period of adjustment, and by the time the masses figure it out, prices are [on the rise] again.”

Only time will tell, clearly, but I think we’d all do well to take a beat before declaring impending calamity on the real estate front.

In the meantime, you may have questions and if our chat is any indication, Rob Ackerley surely has answers. Shoot him a note at rob@condos.ca – I know I will be.

Brynn Lackie is a sales representative at Chestnut Park Real Estate Ltd.

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