(CBC NEWS) Housing across Canada became more affordable in the second quarter of this year because mortgage rates dropped, according to a report from RBC.
Even with prices moving higher, homes became more affordable in nearly every market across Canada, according to RBC’s Housing Trends and Affordability Report.
The least affordable markets were Toronto and Vancouver, where hot competition for properties kept home ownership out of reach for most buyers, despite a marginal improvement in the quarter. Vancouver is the least affordable market with sky-high prices, especially for single family homes.
Most other cities saw housing affordability remain around historic averages, RBC said.
But new buyers in the quarter were treated to lower fixed-rate mortgages than they could have found a year ago, as banks reacted to falling bond yields.
That’s not a situation that will remain, RBC warns. Long-term rates are expected to move higher later this year in anticipation of the Bank of Canada's move to tighten policy in 2015.
Rising rates would erode housing affordability across Canada and reduce demand, said Craig Wright, senior vice-president and chief economist. However he expects a slow rise in rates will lead to soft landing for housing.
"We remain of the view that any rise rates will be gradual and unlikely to unhinge either overall affordability levels or the market — we expect a cooling in activity, not a crash," Wright said in a statement.
Wright points to the rebound in sales activity in May and June that resulted in a 9.4 per cent seasonally adjusted advance in the volume of sales for the quarter. It was the strongest quarterly gain in nearly four years.
"We had anticipated a rebound in activity from earlier this year when the harsher than normal winter weather took hold, but the biggest drop in fixed mortgage rates in almost four years and resulting improvement in affordability also gave the Canadian housing market a boost of extra energy," he said.
New listings also surged by eight per cent.
The RBC Housing Affordability measure, which has been compiled since 1985, is based on the calculated costs of owning a detached bungalow at market value, but also is used to measure the cost of condos and two-storey homes.
KERRY GOLD (GLOBE & MAIL) As bulldozers showed up for demolition duty on the Arbutus Corridor last week, the battle between the city and Canadian Pacific took a controversial turn, with innocent lava beans and zinnias squashed in the middle. Judging from the outcry, residents were divided between those who thought the railway company was stomping all over the little guy, and those who believed that CP had every right to do what it wanted with its own property.
The city says it had offered CP $20-million in exchange for the 11-kilometre strip of land that runs from Granville Island to the Fraser River.
It is zoned as a transportation corridor and CP owns the right of way. CP’s asking price is $100-million.
A train hasn’t run along the line in 14 years, which is around the time when west side gardeners started growing a patchwork quilt of community gardens at various points along the line. Victory Gardens in Marpole has been in operation between 50th and 57th Avenue since 1942, supplying produce during the war years.
But the corridor issue goes beyond the lovely gardens, and we are definitely a city known for our gardens.
Arbutus Corridor is a political hot potato because of a prolonged battle and the west side’s escalating property values, which have made the land worth a fortune. CP has never formally discontinued the track, so any talk of other uses is a moot point until a deal is struck. Negotiations, and court battles, go back for more than a decade, and the value of the land in question has gone up considerably – and will continue to do so. We need to figure this one out.
A green corridor that cuts along the city is unique, which is why it would make an ideal linear park. There would seem to be an opportunity here to create a valuable public amenity that all taxpayers could enjoy, something akin to New York’s successful High Line, which is a former unused railroad converted into a one-mile walkway. As to the value of the Arbutus Corridor, a respected real estate analyst supplied some numbers anonymously. As I said, the issue is an extremely hot potato, and he didn’t want to get embroiled in the controversy.
Let’s look at the hard numbers to put things in perspective, even if the matter is a more complex story than the data can provide.
It took him a couple of days to gather these numbers, and he based his figures on an almost contiguous right-of-way that totals about 42.8 acres of land, or 173,139 square metres. He used properties extending 500 metres from both sides of the railway centre line to determine values.
Property values vary considerably along the line. However, existing parks adjacent to, and in proximity to the corridor, average an assessed value of $2,344 per square metre.
If the city were to designate the Arbutus Corridor for use as a park, its average assessed value is $406-million, according to the data.
However, if valued as a railway, the number drops considerably. Railway land is relatively inexpensive, and this line is abandoned and rundown. At an average of $145 per square metre, the value comes in at around $25-million – closer to the city’s offer.
Let’s look at the housing number, because we Vancouverites love to talk about residential real estate. Hypothetically speaking, if the land were to be rezoned and developed for use as single-family housing, it would have an average assessed value of more than $2-billion, according to the data. That’s based on an average land value per square metre of $12,254. That’s probably never going to happen, mind you, but it illustrates the land’s worth. We won’t even bother calculating its use as multi-family or condo tower housing because that figure is in the stratosphere.
Although the city has never talked about development, some argue that parts of the line would eventually cry out for some sort of development, especially since there are already some adjacent city-owned lands.
“It’s worth more than $20-million,” says real estate analyst Richard Wozny. “The speculative premium alone would more than double that figure.
“The site is so large and complex that no matter how green or how transportation-oriented, any logical land use plan would warrant a little development here and there.”
For example, without a rail line running through it, Kerrisdale would no longer need east and west boulevards. That would free up land for development of some kind, he says.
“The rail line cuts across the city with extensive roadways beside it,” he says. “If the city were to consolidate it with some of the roads, which would now become redundant, it could create large properties for possible development in the future.”
Mr. Wozny isn’t referring to just market housing development. A future plan might include retail, affordable housing, rental housing, neighbourhood amenities, as well as that High Line-style linear park, but with proper cycling and jogging paths. An Arbutus Corridor cycling path could tie in at the north end with the path heading east, around Olympic Village. Considering that there is more green space on the west side than the east side of the city, it would be reasonable for east-side residents to connect to the corridor with an extended bicycle path.
It’s a sure bet that any talk of development would be met with some outrage. Back in 1999, when CP said it wouldn’t service Molson Brewery any more – its only customer along the corridor – it also announced a proposal to zone the land for residential and commercial use. That was met with huge backlash from neighbours who pushed for public transportation and jogging paths. The city’s Arbutus Corridor Official Development Plan came out of a series of public hearings in 2000, designating the land for transportation and greenways.
There’s another aspect to consider, says a well-known urban planner who also wished to remain nameless. The public land was granted to CPR a century ago for use as a railway, he points out.
“When the railways were given land by the provincial government to build a railroad connecting the country it was for that purpose. So when a railroad is through with the land for its intended purpose, should it not go back to the people of B.C.?”
Like I said, it’s a political hot potato.
CMHC says 83 per cent are owners, 17 per cent are investors - Richard Dettman (NEWS1130)
The picture of who owns condominiums in Canada’s two largest housing markets is somewhat clearer today after a report from a federal agency, but remains partly cloudy.
Canada Mortgage and Housing Corp. says 83 per cent of condo owners in Vancouver and Toronto live in them, while the remaining 17 per cent are held by investors. But the survey by CMHC does not include foreign or corporate investors, or even those who live in Canada but not in those two metro areas.
Chief economist Bob Duggan says CMHC is trying to find ways to get that information too.
CMHC found that about half of condo investors rent them out, while one third use them to house family members and 12 per cent plan to sell them at a profit within a year.
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