We see people bidding up house prices even though we are in a pandemic and what may turn out to be one of the deepest recessions in history. This is not only true for British Columbia, but we can also see a lot of the real estate market across Canada which is red-hot especially in the market for single-family homes. While this defies all rational logic, it is where we are. People are looking for the security of owning a home even with people losing their jobs and getting pay cuts.
Herd Following is a theory stumbled upon in 1906 when Francis Galton observed a competition. The competition was for persons to guess the weight of an ox. When all the guesses were averaged, the total average gues was 1,197lbs. The actual weight of the ox was 1,198lbs. Since then, there have been a lot of studies on the theory of collective intelligence which have shown similar results.
Information from the Canadian Bankers Association indicates that around 15% of mortgages have been deferred, this is a total of 743,000 mortgages. As the days go by, we see that “the reopening” is not going as well as we would’ve wanted it to go. We see infections getting higher and more businesses are going back to closed doors and working from home. Look at Apple, they have closed seven of their area stores in Houston and 14 of their stores in Florida since the reopening. Of course, they have enough cash to afford to close their stores, but other businesses are not as fortunate with a lot of white-collar jobs been axed.
What are the Banks Doing?
We see central banks flooding the system with liquidity so much so that free-market price discovery is almost entirely out of the window. And so now we see cash finding its home in hard assets.
What Does This Mean for Society on a Whole?
We are getting to that tipping point and this is certain to have long-lasting effects on our society. There are several possible outcomes that we must be ready for.
What We’re Watching
Bond Yields Trading – these are currently at their lowest level in history.
The US is currently not showing a V shape recovery in current business conditions and this is right across the country.
Small businesses that are bringing back all employees account for only 50% of the total small businesses in the US.
There has been an increase in the interest of small homes and RV model homes in the past couple of months. A factory in Oakland California is offering homeowners the option for a 3D print. They can print a 350 square foot studio in under 24 hours. The company is called Mighty Buildings, and they have a focus on the accessory dwelling unit market.
With a lot of uncertainty due to the pandemic more people are looking into this avenue, not just an accessory dwelling but as their main dwelling. They came up with the technology as a way to address the shortage of housing in California. They boast that they are offering a 21st-century technology to solve a crisis.
The material being used in these structures is a quick, curing, freeform architecture that can support its weight safely. The structure you end up with an energy-efficient structure that is extremely strong.
One of the key driving factors behind this printing technology is sustainability. With this technology, 3 to 5lbs of waste per square foot will not end up in a landfill. With 3D printing, the only thing that is printed is the things that are needed.
By cutting waste, this new technology also cuts the overall cost of the building. The average building costs with this technology are reduced by approximately 45%. The cost of labor is one of the things that affect the cost of a house the most. 3D robotics can do the more complicated and dangerous aspects of building, but human workers are still needed to complete the task, so this initiative is not taking jobs away.
With COVID-19 motivating more people to seek financial freedom, many are downsizing their lives as a means of downsizing their expenses. In Vancouver, 3D models can be had from Mint Tiny Homes. They note that they have seen an increase in interest over the past couple of months with persons looking to downsize as they are concerned about the possibilities of job loss. People don’t want to have large bills, and they don’t want to have large liabilities, so they are trying to get in a better financial position while they can before things get worse. We also see where people are looking more towards homes outside of the city and away from the crowds. With more people engaging in flexible working arrangements they need for living or near, the city is no longer necessary.
The Canada Mortgage and Housing Corp. (CMHC) has indicated that they are bracing for the COVID-19 pandemic to further impact the Canadian housing market. The short term uncertainty is significant as housing demand falls with household incomes becoming weaker and weaker.
The sales and price records were broken in July 2020, but this was after the shut-downs in spring. So we can say the market played a little catch-up if we may say so. CHMC is noting however that the economic shock of the pandemic has not been fully reflected in the latest data on the housing market. They note that the process of the pandemic could still have a huge effect on new buildings as well as the prices and sales of existing buildings.
We expect it to take months for these impacts to materialize, but we can see some factors already coming to play. CMHC has noted a seeing the difference in provisions for insurance claims. This is showing up in the financial results proving that the impact is far-reaching.
CMHC’s net income for the three months prior to June 30, 2020, was $566 million. This is up from $379 million during the same period from the previous year. The arrears rate for which is 0.34%.
While they saw this income, they also saw an increase in claims expenses, jumping to a 711% increase up by $256 million. This was due to an increase in COVID-19 related claims including mortgage deferrals.
As part of a government program, CMHC this year purchased $5.8 billion insured mortgage pools. They also administered the small business Canada Emergency Commercial Rent assistance program.
In the next report from CMHC, we will see what impact the stricter underwriting criteria had overall. As of July, requirements for insured mortgages have become tighter and requirements for down payments have also become tighter. The corporation has even suspended dividends in an effort to save money in the event further action is needed by the government.
Stick around to read more as the information unfolds.
Seniors can breathe a little easier now that they have more affordable housing to look forward to. Construction for a 37 unit project is underway to provide for the aging community, as a result, the project in Kamloops will provide rental housing to seniors.
Seniors and their loved ones can now have the peace of mind that an affordable home provides. The Ministry of Municipal Affairs and Housing along with community partners are working to provide housing for people in Kamloops that are safe, good, and affordable.
The houses are being built in partnership with the ASK Wellness Society along with the City of Kamloops. The new homes will be built at 1260 Hillside Ct. The building goes up to four stories and offers one-bedroom units to seniors with rental costs ranging from $375 to $825.
Mayor Ken Christian is happy to see this move for more affordable housing for the seniors of the city. He notes, “Housing is a key area of focus for our council, and we continue to work with our partners to improve diversity and access throughout the housing continuum.”
The project is owned and operated by the ASK Wellness Society and the project will go by the name “Cookie’s Place.” The homes in this development will be co-located and operated alongside Maverick Manor which is also an ASK Wellness Society Development. Their goal is to have people move from streets into homes, so they can regain their health and have better access to employment.
The project is directed towards couples that are 55 years and older. This new development complements the Maverick Manor development that offers residents life-skills training, recovery services, as well as employment placements.
Both the Government and the BC Green Party caucus have shared the priority for delivering affordable housing. The BC Green Party Caucus is a partner of the Confidence and Supply Agreement.
The development is being achieved through collaborative efforts from a number of stakeholders. The Land for the project was provided by the society. Along with that, the land values approximately $817,000. The City of Kamloops has also provided municipal waivers of $130,000. The province is additionally allotting 3.9 million dollars which are taken from the Building BC: Community Housing Fund.
The project is expected to be complete and ready for the resident move-in for the fall of 2021.
Kamloops “Cookie’s Place” Quick Facts
The province has over 1,000 homes that are either underway or completed in Kamloops. Of these homes,
290 homes are allotted for moderate-income earners
155 homes are allotted for persons who are currently experiencing homelessness
44 homes are allotted for women and children who are in violent households
There are also an additional 533 beds that will be allotted for student housing
Check out maps of the development here. You can also find information on how BC Housing is providing support to residents of British Columbia during the pandemic here.
The Canadian housing market is at a very interesting point. The current housing market in Canada is one of the biggest in the world. As a matter of fact, the growth of 88% since 2005 makes Canada’s Housing market one of the highest growing markets of any other G7 country.
The FIRE sector; Finance, Insurance, and Real Estate make up approximately 25% of the country’s GDP. Household debt to GDP has increased significantly over 100% of GDP. With the striking of the global pandemic crisis, what are policymakers to do now?
The current home ownership rate in Canada is approximately 69%, and we can see the wealth of Canadians now hanging in the balance. Evan Siddall, Canada’s Mortgage, and Housing corporation have expressed his concerns about the elevated levels of debt and the unsustainable increase in prices. He expresses that there is a possibility for home prices to fall between 9 and 18% based on the information from recent forecasts on the market.
What Are Mortgage Lenders Doing?
Siddall made the decision to tighten lending standards in a bid to protect mortgage insurance providers that are taxpayer-backed. He is hoping that the other private mortgage lenders in Canada will follow his lead. But this is not what took place.
Lenders have continued to issue new loans and are now directing their new business to the private insurers. Both private entities are of course happy about the growth they are experiencing, and we can’t fault them for that. They are only taking 10% of the risk as the government covers the other 90% of the loss.
Siddall sees this as blind disregard and moral hazard. He recently wrote a letter to Canadian banks expressing his concern. His letter included the following request “… I’m asking for two things, first, we would hope you would reconsider highly leveraged household lending. Please put our country’s long-term outlook ahead of short term profitability. Second, please don’t aggravate the impact of undermining CMHC’s market presence unnecessarily.”
Siddall’s letter was not well-received and was referred to by some bank execs as “alarmist and a bit extreme” but are we really surprised by all this?
What are your views on this matter? We’d love to hear them, please leave them in the comments below.
Even before the pandemic, there was a trend towards higher figures in Toronto and Vancouver. These two municipalities have seen record lows in 2018 and prior. But the mortgage delinquency numbers across Canada, on the whole, are rising.
Better Dwelling tracks the Canadian Real Estate Market. The Better Dwelling entity was founded by Stephen Punwasi, who is an analyst. They indicate that mortgage delinquencies are rising.
How are Mortgage Delinquencies Measured?
In Vancouver, mortgage delinquencies are measured by looking at the number of mortgages that are overdue for more than 90 days. In the first quarter of 2020, this number reached 0.13%. These numbers show an increase over the same quarter for 2019, rising from a percentage rate of 0.1% in 2018.
In Toronto, the numbers are showing a 10% increase between 2019’s first quarter and 2020’s first quarter. The first quarter’s last few weeks were the beginning of the pandemic and the start of lockdowns in Canada. But the trend towards higher numbers was already established in Toronto and Vancouver before this, so we can’t say COVID-19 is to blame.
What is a Mortgage Delinquency Anyway?
Mortgage delinquency refers to how quickly a home can be converted to its cash value. When the market is hot, homes are selling rapidly. So owners who cannot make their payments can typically, list their home, get an offer and close within three months. If this model is in play in the market, the delinquency rates are kept low. When the process takes longer, then the prices get higher.
Better Dwelling notes that the market as it stands is stalling. The longer it takes to make a sale, the more the delinquencies will rise. With high default rates, many homeowners are unable to exit their real estate in a fast manner.
Steve Saretsky, a realtor in Vancouver, notes that the change in a rising and falling delinquency rate is something we should be watching into 2021. Saretsky thinks the foreclosure rate will also increase in the next couple of years and that the process will be very long and drawn out for British Columbia. In a recent report he notes that “From the time you miss a mortgage payment to the time the house sells in court, it takes an average of between 12 to 15 months,”
The July 2020 buyer and seller activity for Metro Vancouver exceeded historical levels. This was published in the Real Estate Board of Greater Vancouver (REBGV) monthly market report. The report indicates that the total residential home sales increased by 22.3 % from 2,557 sales in July 2019 to 3,128 sales in 2020. The increase in July was a 28% increase over June 2020, where 2,443 homes were sold compared to the 3,128 sold in July. In total, the sales for July 2020 were 9.2 % higher than the 10 year average for sales in July.
Colette Berger, Chair at REBGV, notes that these numbers are a result of the pent up activity that both home sellers and buyers have been holding in. Couple that with limited supply overall and lower interest rates makes the market more competitive.
The July 2020 Metro Vancouver MLS saw an addition of 5,948 attached, detached and apartment properties being listed. In July 2019 only 4,613 properties were listed so July 2020 is showing a 28.9 % increase in listings compared to the same month of 2019. In June 2020 a total of 5,787 homes were listed showing a 2.8% increase from the previous month as well.
Currently, there are 12,083 properties listed for sale on the Metro Vancouver MLS system which is showing a decrease of 15.1% compared to the 14,240 properties that were on the list as of July 2019. The number is showing an increase though when compared to June 2020 which had a total of 11,424 properties listed.
Reaching Potential HomeBuyers Despite the Restrictions
We understand that everybody must take new strides to ensure that social distancing is being observed. As such companies are using a variety of technology solutions to keep home buyers and sellers safe with their interactions. We are all trying to limit in-person interactions as much as possible. As much as can be done virtually is done to ensure the safety of our nation as a whole.
Sales to Active Listings Ratios
For July 2020 we are seeing a sales to active listing ratio of 25.9% for all property types. We can further break that down by property type. Detached homes have a ratio of 25.1% while townhomes have a ratio of 31.1% and apartments have a ratio of 24.7%
The experts note that when the ratio dips to less than 12% for a sustained period is when there is downward pressure on home prices. On the flip side, home prices will rise when the ration passes 20% over a period of multiple months.
The benchmark price for residential properties on the Metro Vancouver MLS Home Price Index is currently $1,031,400. This is showing an increase over July 2019 of 4.5% and an increase over June 2020 of 0.6%.
Sales of Different Types of Properties
Detached home sales reached 1,121 in July 2020 which was an increase of 33.3% over the detached home sales that were recorded (841) for July 2019. The benchmark price for detached homes is $1,477,800. This price is showing an increase of 5% from prices in July 2019 and 0.9% from prices in June 2020.
Apartment home sales prices reached 1,400 in July 2020 showing an increase of 12.6% when compared to the sales(1,243) of July 2019. The benchmark price for apartments is currently at $682,500 indicating an increase of 4.2% from July 2019 and an increase of 0.3% when compared to June 2020.
Home sales for Attached homes were at 607 for July 2020 indicating an increase of 28.3% over the 473 sales for July 2019. The benchmark price is $797,700 indicating an increase of 3.7% over prices at July 2019 and a 0.9% increase over prices at June 2020.
A lot has changed since the start of this pandemic. People have lost jobs, or are now working fewer hours. While many economies are reopening, there looms the need for further lockdowns. It is obvious that this pandemic is not going anywhere soon, and we now have to adapt our life as we know it to meet these needs.
While everybody’s situation is different, housing needs are changing for one reason or another. Some persons are finding their family counts reduced as they lose loved ones to the virus while others are seeing an increase as cohabitating becomes are a more affordable and feasible option. Whether you need to go up in the house or go down in the house we can help you.
How Can SilverBeam Homes Provide You with a Housing Solution?
Sell your old/current home to us and let us help you to construct a new home based on your specific needs. Here, at SilverBeam Homes, we are home builders, but in this crisis, we want to meet you more than halfway. We want to help you with everything from selling your current home. That way you can focus more on the things that need your attention, and we will get the work done for you.
What You Need to Know Before Buying or Selling a Home
Buying/Selling a home was always a huge undertaking. Imagine now doing both in a pandemic! Now more than ever, you have to make sure that you make a very wise choice. Are you currently at that place (between a rock and a hard place) considering the sale of your home and moving your family into a different home?
If your needs have changed, then you have a good enough reason to sell and repurchase or have us build you a new home. The advantage of building a new home is that you now will have the opportunity to have just what you and your family needs.
Why You May Need to Sell your Home
Your current location has become unsuitable. If your job situation has changed and you now need to travel further for work, it may make sense to move. With many people having lost their jobs in the pandemic, we are now having to really become more flexible and that may mean taking a job that is further away. If you are the sole breadwinner, moving closer to cut commute time could help you better manage your finances.
Your household as shrunk or grown. Your current house may become too expensive to maintain in the event of a loss. Or maybe your extended family will now need to come live with you or vice versa. Either way, if your space needs have changed, then you will benefit from purchasing a new home.
Leave sad memories behind. If you lost a family member during the pandemic, even if your space needs haven’t changed, you may want to leave the bad memories behind. If you are financially able to make the move, then selling your current home and moving into a new one may not be a bad idea.
Real Estate and “Subject To” Clauses
“Subject To” clauses in contract negotiation are your safety hatch. They allow you a means of escaping a contract in the event that anything goes wrong. You can find a list of clauses from The Real Estate Council of British Columbia’s website. The most common clauses you may come across are;
Subject to Financing
This type of clause limits your ability to negotiate. The buyer cannot remove this clause at the offer/counteroffer phase. It means the buyer needs a mortgage, so they are making the offer with the hope that they will receive the necessary financing to be able to purchase your home.
Subject to Inspection
This clause can be easily negotiated since an inspection takes on average three days to arrange. If you want to get your house sold faster you can ensure that the inspection is completed a lot quicker so the buyer knows exactly what they are getting into. You can even have the inspection done and report ready if a buyer requests it.
Subject to Sale
This clause gives your buyers a particular amount of time in which they need to sell their current home. Chances are your buyer can’t afford to be paying for two different homes. So you want to include some time in the clause for them to get their home sold, so they can purchase yours. This is usually a period of 4 to 6 weeks.
If you opt to complete your sale and repurchase with SilverBeam homes we can help provide a hassle-free process flow. With us, you don’t have to worry about listing with a realtor. We will offer a cash payment for your house and ensure a speedy closing process. If the funds from your home cannot cover the cost of your new home we can help you by putting you in touch with finance professionals to get the additional funds.
Contacts us today to recreate your reality and have a home that allows for the execution of our new normal.
Getting your home and yard into tip-top shape this summer will be easier than ever. Here’s everything you need to know and do.
With every new season, there is a new set of maintenance tasks to take care of for your home. With summer here, you want to take the necessary steps to prepare your home and yard now before it gets too hot. Get as much done now so you don’t have to be doing outdoor maintenance tasks in the summer’s heat.
There’s a lot to do, you need to check out that Air conditioning Unit or system and may even want to hang a clothesline. With heat and cooling costs increasing you can save by drying clothes outdoors. And if none of those apply to you, keep reading, you’re sure to find something. Let’s dig in!
Your home may have smoke and carbon monoxide detectors. You want to check these to see if they are working properly. Check batteries for lifespan and make changes if necessary.
Check Cooling Systems
Your fans and air conditioners are about to be hit with their heaviest workload of the year. Ensure they are up for the task by giving them a check. If you don’t have AC units you may be able to easily install some window units or portable units yourself. If you have a central air conditioning unit you will need to have the unit professionally serviced.
Have ceiling fans? Ensure those are clean. They can easily be cleaned with a damp rag. If your ceilings are high you can get a fan duster or other fan cleaning tool that will help you get to hard-to reach fan blades.
Install Outdoor Clothesline
Now is a great time to give your electricity usage a bit of a break. With your use of more cooling devices or lower temperatures, you will be using more electricity. Why not take advantage of the heat outside and let your laundry dry out in the summer sun. Plus air-dried sheets smell the best!
Clean that Outdoor Grill/Cooker
Your cooker needs a deep clean before all those backyard barbecues this summer. Always check the manufacturer’s guide before you start. Here are some simple tips for cleaning your cooker.
Gas Grills: turn your grill on, with the heat on high. With the lid closed, allow the grill to cook for around 30 minutes. Allow the grill to cool, then get your grill brush and brush away any debris. Wipe down the outside of the unit with a damp cloth or sponge along with a suitable cleanser and get rid of any dirt, gunk, or dust on drip pans appropriately.
Charcoal Grills: Empty out your grill and wipe away any ashy residue you find. Clean the inside with hot water and some dishwashing soap and a scrub sponge or brush. Allow the grill to dry before you use it.
Shine that Porch
Sweep and mop your porch with a surface suitable cleaner. If you have a buildup on the floors you may use a brush to scrub it away.
Check on Your Deck
Look for signs of rotting on your deck. You also want to look for any nails that are coming loose. Check if your deck needs sealing by sprinkling some water onto the boards. If you see the water beading up then your boards are fine. If the water soaks away right away you have to reseal that deck.
Now is the best time to clean your windows on the outside.
Now is a great time to add mulch to your garden to keep weeds at bay. This will also help the ground to retain moisture through the summer heat to keep your plants vibrant and looking healthy as they continue to grow.
Check for Leaks
Check all your hoses and faucets for leaks. A tiny drip can equal lots of water wasted. Even pinhole leaks in hoses can be a problem, but these are easy to mend. For small leaks, a wrap or two of electrical tape should do. For larger leaks, you may need to replace your hose and anything else may require you to get a plumber.
Primp the Plants
If you have annuals or perennials you will need to deadhead them so that they can remain productive. If you have spring bulbs with visible dead foliage you will need to prune them, so they can have a well-groomed look. But only if their leaves aren’t all green.
Plan a Timetable for Watering
This is a good time to train your garden so it can endure the harsh, dry days ahead. This also helps you to conserve water. Instead of watering your plants lightly on a daily basis give them a deep watering every couple days. This will help your plants to grow stronger and deeper roots.
Keep the mud and dirt of summer on the outside by adding doormats at your entry doors. You want to have multiple mats, one coarse one on the outside to catch dirt, and a softer one on the inside. If you live close to the beach you may want to have a bucket, tub, or bottle of water that can be used to wash off sandy feet and sandals before they come into the house.
There you have it! The 12 things you need to do to get your home summer-ready this year. What are some of your summer maintenance tips? Share them in the comments section below, we’d love to know what we missed.
Last week we looked at a couple of tips to help you make your home feel a little new with just a few low budget changes. We pointed out a number of ways you can do this starting in your bathroom. If you haven’t seen that blog post yet, we recommend you go on over and read it here.
This week we are back with more ways you can spruce up your home without spending money, time, and resources on a renovation. So let’s get right into it!
A couple of door handle changes, towel rod changes, cabinet pulls and toilet holder changes can make a great visual impact. Consider these as the jewelry in a room, they are an easy way for you to change up the look of your space.
Hardware is really what sets the stage for any room. For an on-trend vibe you can install hardware with a matte black finish or with a brass finish.
Spaces such as your living room and bedroom can benefit from an addition of or change of soft decor. Soft decor as the name suggests represents your soft decor items. Think pillows, throws, rugs, and cushions. These provide a great way to add a punch of color or pattern to a room. They can be used to create focal points and even as an expression of your love of artwork.
Upgrade the Walls
If you can afford to, you can change your walls. This can be with a fresh coat of paint or two or even with some wallpaper. Now you don’t have to do an entire room. If you are opting for wallpaper most companies will calculate the amount you need for you based on the square footage of your room. You can also use this online calculator.
You can opt to complete an accent wall to give your room and your home a totally different feel. If you are up for a bit of a challenge you can paint shapes onto a wall in different colors to create a unique accent wall with input from each family member. That would be a great way to involve the entire family in creating some character and some memories for your home and household.
Note that there are types of wall decor that fall under the soft decor category as well.
Change the Floorplan
Yes, you have had your furniture the exact same way they arranged it in the model house. But who says it has to stay that way? If you can move stuff around and still maintain the functionality of your room, then why not do it? Just get some helping hands for the larger pieces of furniture and make sure you don’t injure yourself.
Do-It-Yourself is seeing a comeback in the design world now. We can thank COVID restrictions for this. If you have a small project to do around the house, chances are you now have more time than ever to complete it. Why not update your powder room or your bathroom? Or think bigger and update your living room or kitchen. Remember small changes on a limited budget can still make a world of difference
Tell us in the comment section below, what type of DIY projects you took up around the home and how well did they come out? We’d love to hear from you!