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the highs and lows of the Lower Mainland’s new-housing market

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Demand for new homes in the Lower Mainland began the year on a high note before petering out, but the decline has taken more time to unfold than it did in Metro Vancouver’s resale housing market for a couple key reasons.

This is one of the takeaways from a Livabl interview with Patrick Lanigan of industry observer MLA Advisory, the market-tracking department of real estate marketing firm MLA Canada.

Lanigan spoke with Livabl this week providing an overview of how the new-home market in the Lower Mainland, or the area roughly from West Vancouver to Abbotsford, performed in 2018.

“I think it did lag a little bit behind… what was happening on the resale market. There was still pretty strong confidence in the market from all types of buyers,” he tells Livabl, noting that was especially the case in the presale market, where a buyer enters into an agreement with a developer to purchase a yet-to-be completed unit at some point in the future.

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One of the factors that has somewhat insulated the new home market from the broader real estate cooldown is the fact that in many cases, the buyer is only paying a deposit up front and won’t have to shoulder the full cost of ownership for years.

Lanigan provides the example of a unit in a large, master-planned development. “You have five years for that unit to appreciate in value and that market to come up again, which is a pretty long time in a real estate cycle — so it’s a bit of a safer bet.”

There is also the matter of supply. While Vancouver’s inventory of existing condos has surged 72 percent annually, Lanigan says there is a relatively limited availability of new product in major Lower Mainland markets.

“We still have very limited amount of projects coming out in these markets,” he says. “Most of the major markets are only seeing 2,000 units come out a year, at most.” Burnaby has 6,000 newcomers a year, he points out.

Nonetheless, the market is weaker today than it was at the start of the year. The rate at which buyers are snapping up pre-sale units continues to decline, while fewer investors are active.

Lanigan says about 85 percent of the pre-sale units developers released in the first quarter were purchased at the time, whereas in the fourth quarter MLA Advisory pegs the quarterly absorption rate at 45 percent. For the whole year, MLA Advisory says 65 percent, or 11,000, of the 17,000 pre-sale units put on the market this year in the Lower Mainland have sold.

These units include homes in concrete and wood-frame buildings as well as townhomes.

Typically, developers need to sell 60 to 65 percent of the pre-sale units in a development in order to qualify for construction financing, Lanigan says. “That kind of gives you an indication that most of these projects are in a really good place financially already… and they can start construction now,” he explains.

To date, MLA hasn’t observed any big projects that have opened for sales end up closing their doors, something that has played out in Toronto in recent years. But Lanigan does say developers who purchased land in the past year or so may have challenges making the numbers work moving forward.

Rising interest rates, higher taxes on foreign-homebuyers and speculators, construction costs, and expanded stress testing for mortgage applicants are weighing on the new-home market.

“We just came through the most sales that our market had ever seen by a long shot,” says Lanigan. “With these new regulations, taxes — there’s also interest rates are rising — I think people are just taking a step back and just taking a breather after that hyperactive activity that we saw.”

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New home? Prepare for the unexpected

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(NC) Buying a house, getting married or having your first baby are all major life events that are likely to affect your finances. But whether you’re in the midst of a major life event or not, it’s important to check in on your finances regularly to maintain good financial health.

Your financial health encompasses things like your spending, savings, borrowing and future financial plans. It also means dedicating a set amount of savings for unexpected future events. It can even include optional credit protection insurance, such as TD protection plans, to help cover your debt balances in case of death, a covered critical illness or total disability.

Even though it can be tough to think about the unexpected, life is unpredictable and it’s important to plan for the unexpected. Find more information at td.com.

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Mortgage pitfalls to avoid

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(NC) Throughout life, you may have moments where you’ll make a large purchase or invest in a costly item, like your family home. But whether you’re in the market for your first new property or already have a mortgage, leaving this asset unprotected can be costly.   

Insuring your housing financial debt, as well as debt for other big-ticket items like a new boat for your lakefront cottage or keepsake jewelry like an engagement ring, is a smart investment in your well-being.

To help protect your debt balances like a mortgage, your bank may have optional credit protection insurance products.

“Your home is one of your biggest assets, yet illness can happen at any stage of life. Worrying about your mortgage when the focus should be on health isn’t a situation anyone would wish for,” explains Shirley Malloy, vice president at TD. “Fortunately, we offer mortgage protection to provide coverage for your outstanding balance should you face a covered critical health event.”

Mortgage protection can be purchased whether you’re in the process of applying for a mortgage or already have a home financing solution. But what about protection options for credit card debt?

“Given the unprecedented circumstances of this year, many Canadians are trying to plan for the unexpected to protect themselves and their finances,” says Malloy. “TD balance protection plus is an optional product designed to help you deal with your credit card payment obligations in the event of a covered event, such as loss of employment.”

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Is your internet too slow? It’s probably not you

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(NC) We all know the aggravation of a school lesson that just won’t stop freezing or the family video call that looks more like a photo montage. And, as we adjust to the impact of COVID-19 on our day-to-day, that slow connection can have frustrating consequences.

Working from home and learning remotely, both need fast, stable internet, something not enough Canadians have yet. Even if you have fast devices in your home, if the infrastructure in your area is not optimal, your connection won’t be either.

Right now, cities have the infrastructure needed to ensure access. But rural and remote communities are hugely underserved, with fewer than half having high-speed internet, and fewer than a third of households on reservations have high-speed connections.

Fortunately, change is coming. The Universal Broadband Fund is backing projects across Canada right now to ensure the reliable, high-speed internet connections families need to work, study, access services online, and safely stay in touch with each other.

The fund existed before COVID, but as a response to the pandemic, its timetable has been moved up by four years to a target of 98 per cent of Canadians with high-speed internet access by 2026. With the faster pace, at least 90 per cent of us should be connected by the end of 2021.

The fund is focused on improvements in rural and remote communities across Canada to fix the disconnect between internet access for urban and rural households.  This means more remote work opportunities, better access to remote learning and safer access to healthcare, no matter where you live.

It’s not just for good connections at home, either. The improvements mean much better access to mobile networks on highways between remote communities. The result is better, safer navigation and access to emergency services for your family, even on the road in the middle of nowhere. Mobile projects will be focused on serving Indigenous communities and the roads leading to them.

The shape these improvements will take in your area will depend on where you live. Canada is huge, and its communities are hugely diverse, with diverse needs. Keep an eye out for local projects — they’re a small part of something much bigger.

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