The week’s top stories focus primarily on Metro Vancouver’s real estate market, from a change in development costs, to statistics and analysis that suggest the housing market is headed for a comeback. Meanwhile, other statistics delve into the ownership and pricing of B.C. homes among immigrants. On the commercial side, historic hotels in the city are drawing both tourism and business opportunities.
Here is Western Investor’s pick of the top real estate stories published this week.
New Statistics Canada data cites changes in regional development costs for the burst of building permits this April.
Planned changes to Metro Vancouver development costs this past May pushed April building permit values to new heights.
The region issued $1.8 billion in permits this April, up nearly 88 per cent month-to-month and up 131 per cent year-over-year.
In its data release, Statistics Canada said the increase was tied to developers getting ahead of the first cost changes in Metro Vancouver since 1997.
The activity meant B.C. nearly doubled its previous record for residential permits. At $2.2 billion for the month of April, residential permits across the province – primarily for multi-family buildings – rose 138 per cent over March, and by nearly 126 per cent over April 2018.
Helped by Metro Vancouver, Canadian municipalities issued a record $9.3 billion in permits, up 15 per cent or $1.2 billion from March.
It is the largest increase since May 2007, according to Statistics Canada. British Columbia accounted for most of the gain.
Data suggests housing inventory, while higher than in recent years, is still historically low – leading to increased demand, according to Dexter Realty.
A study of 20 years of Metro Vancouver real estate data has led a local real estate brokerage to conclude that the market is “primed for a comeback.”
Dexter Realty reported that, despite listing inventory being higher currently than in the recent market boom, it is still at historically relatively low levels compared with the huge numbers of homes for sale during the market dips seen in 1997-1999, 2008-2009 and 2012-2013.
The brokerage pointed to May sales of Metro Vancouver homes being 44.2 per cent above those in April, and said that it showed a market that has “a gasp of breath.” It said that this increase in demand combined with relatively low supply is a sign of confidence in the market.
Kevin Skipworth, managing partner of Dexter Realty, wrote in his analysis, “During the periods between 1997 to 1999, 2008 to 2009 and 2012 to 2013 monthly home sales in Greater Vancouver persisted below 2,000 units. In each of these periods, there were either over or close to 20,000 listings on the market. In this current cycle we are seeing the market struggle to get over 15,000 active listings — at a time when the overall housing stock is at its highest. Demand is increasing and will increase, and supply is clearly less than other significant slower markets.”
To illustrate this, Skipworth, who is an economics graduate, highlighted the number of sales and listings in those past market slumps in charts using Real Estate Board of Greater Vancouver data. He said it shows that the difference between now and then is that recent monthly sales have exceeded 2,000 units while listings have not exceeded 15,000 homes.
Skipworth continued, “There is confidence in the Metro Vancouver real estate market long term—with more buyers and fewer sellers, it will lead to stabilization in the market. We may be seeing prices bottom out in the lower and middle end of the market, but there are still great opportunities for buyers. However, [those opportunities] are diminishing.”
Skipworth noted that housing affordability has not significantly improved for most home buyers, and blamed this on federal and provincial government policy.
He concluded, “The recent intervention on the demand side by the provincial government through taxes and the federal government through the stress test only served to reduce prices significantly in the high end for those the government wanted out of this market and, unwittingly, prevented home buyers from getting into homes in the lower end. Thus affordability overall has not improved and will not get any better without a serious look at the ill-conceived government policies and other factors keeping new homes from making it through the rezoning process to completion.”
B.C. immigrants own fewer, but much pricier, homes than locals: StatsCan – Glacier Media Real Estate
Homeownership relatively lower among B.C. immigrants than Canadian-born residents, but immigrants’ average assessed home value is more than 50 per cent higher, says statistics agency.
There are proportionately fewer homeowners among B.C. immigrants than Canadian-born residents, but the homes owned by immigrants average an assessed value of nearly 53 per cent higher, according to Statistics Canada data released June 11.
Statistics Canada reported that, in 2018, 23.1 per cent of B.C. homeowners were immigrants, which is slightly lower than the overall percentage of the population (just over 28 per cent in the 2016 Census).
Across B.C., the average value of a home (all property types) owned by a Canadian-born resident in 2018 was $602,000. This compares with $919,000 average assessed value of a home owned by immigrant owners.
Among owners who are recent immigrants (2009-2016), the average value of their homes was lower at $717,000, compared with those who emigrated between 1980 and 2008, whose average assessed home value was $955,000.
The home-value differential increases even more among owners of more than one property. The average value of immigrant-owned homes where the owner has two B.C. properties was $1.79 million, which is 64 per cent higher than those owned by Canadian-born owners of two properties ($1.09 million).
The federal statistics agency also said that 39 per cent of the homes in Metro Vancouver in 2018 were owned by immigrants, compared with 48 per cent owned by Canadian-born residents.
In Metro Vancouver, StatsCan said that immigrant-owned detached houses were worth an average of $1.8 million, which is $255,100 more than the average value of Metro Vancouver houses owned by Canadian-born residents.
Women own more homes than men
In its Housing Statistics report, StatsCan also looked at other homeowner group breakdowns, including age group and gender. It reported that millennials accounted for one in seven homeowners in British Columbia, and that millennial women owned properties with median total assessment values that were slightly higher than that of properties owned by millennial men.
The agency added that, among all age groups, more women owned B.C. homes than men, accounting for 51.9 per cent of homes.
The report also looked at the breakdown of owner-occupied homes, and found that 71.1 per cent of B.C. homes are owner-occupied. In general, more homes are owner-occupied in urban areas, as there are more second and vacation homes in rural areas, said Statistics Canada.
Century-old properties present business opportunities but require significant investments.
Hotels that have been around for 80 years or more can cost a fortune to keep in good condition, but owners say they are proud to maintain them to a standard high enough that they serve as tourist attractions in their own right.
The necessary cost of investing to maintain hotels extends to newer hotels, said David Ferguson, who is a director at CBRE Inc.’s hotels valuation and advisory services group in Canada.
“Hotels reach points where they require capital upgrades that aren’t necessarily a touch-and-feel upgrade that a guest can appreciate,” he said. “When you talk about electrical systems, roof, or plumbing or piping repairs – replacing boilers and things like that – that’s one of the challenges the hoteliers face.”
Vancouver’s high hotel room occupancy also makes it a difficult decision for hoteliers because such repairs could shut down part of the hotel, meaning less revenue in addition to higher expenses.
The Fairmont Hotel Vancouver is not the oldest hotel in the province, or even the city of Vancouver, but it is the oldest hotel by far among Vancouver’s large hotels.
With 567 rooms, that hotel – which turned 80 years old this spring – ranks No. 3 on Business in Vancouver’s list of largest hotels in Metro Vancouver and Whistler. It is several times larger than the 155-room, 92-year-old Rosewood Hotel Georgia, which is a block away.
The oldest hotels in the city are even smaller, as could be expected.
The 107-year-old Sylvia Hotel, which soared above English Bay when it was built, has 120 rooms, including rooms on the eighth floor in space that was a restaurant until 1962, owner Jill Davies told Business in Vancouver.
The 106-year-old St. Regis Hotel Vancouver, in contrast, has declined in size. Owner Rob Macdonald completely refurbished the hotel after he bought it a couple of decades ago and reduced the room count to 65 from 74 to make the rooms larger.
For Fairmont Hotel Vancouver general manager Adam Laker, the secret to longevity is “keeping up with trends” and trying to stay ahead of competitors.
“We’ve refurbished a lot,” he said. “We’ve rebuilt nearly the whole hotel inside.”
Laker said operating a hotel where guests have high expectations comes with opportunities and challenges.
The opportunity is to land guests who want to stay in the hotel for its historic look and significance. The challenge is to fulfil high expectations.
Renovating rooms is also more challenging for a historic hotel because the update has to strike a fine balance between having a traditional look and a modern feel. That challenge does not exist with a new hotel because owners get to start with what Laker called a clean slate.
The Fairmont Hotel Vancouver has held its value. West Vancouver-based Larco Investments Ltd.’s hospitality arm bought the hotel for $180 million in May 2015 from Ivanhoé Cambridge, after outbidding fellow British Columbians Nat Bosa and wife Flora Bosa. The Bosas, the previous year, spent $89.9 million to buy what is likely B.C.’s oldest existing hotel, the 111-year-old Fairmont Empress, in Victoria, from the Caisse de dépôt et placement du Québec pension fund.
Nat Bosa told BIV that the real cost of that acquisition was substantially higher. He wound up spending more than $65 million on renovations, after first budgeting around $30 million for that work.
“I don’t regret one nickel that I spent on it,” he said. “When I bought the hotel, it was an embarrassment for the condition it was in.”
He first closed and renovated about 245 rooms, before then closing the remaining 220 rooms for renovations. He still plans to renovate part of the hotel’s roof but otherwise the project is done, he said.