Vacancy Down in Saint John

CMHC data shows that the Saint John CMA had a lower vacancy rate in October 2018 than October 2017. The rate was recorded as 3.7%, down from 4.7% the year before.

We invite you to geek out hard and learn lots of stats from the CMHC web portal: https://www03.cmhc-schl.gc.ca/hmip-pimh/en#Profile/1/1/Canada

Churchill Boulevard–August 15, 2015

The apartments being built on Churchill Boulevard are getting the finishing touches.

BMO Housing Market

There’s an interesting article on HuffPo Canada about BMO rating of various Housing Markets around Canada. Saint John is rated as weak, which is relatively good compared to the “very weak” rating of Halifax, PEI and Newfoundland. 

An interesting aspect of the scorecard is a Price/Family Income ratio.  Saint John has a low rating in this category (2.2), which I take to mean that housing is relatively affordable.

Saint John Vacancy Rates are down

According to the CMHC Rental Market Report for Saint John for Fall 2014 vacancy rates are down compared to 2013. 

Apartment vacancy is down to 8.9% in the City from 11.3% in 2013.  For the CMA (which includes the suburbs) the vacancy rate went down to 9.0% (from 11.4% in 2013). 

In the south end vacancy was up slightly from 10.9% in 2013 to 11.2% in 2014.  Vacancy was actually down for 2 bedroom apartments in the South End, but was up for bachelor and one bedroom units.

In west Saint John the vacancy was down to 5.0%.  In the other parts of the city (and outlying areas) rates were also down.

Not surprisingly, vacancy rates for buildings built since 2005 were the lowest overall, with the highest vacancy rates being recorded for apartments built before the 1940s.

Waterloo Place Townhomes

I posted a photo of townhouse construction on Waterloo Street back in November, but didn’t have too much information on the project at that time. 

Today I discovered some marketing material for the project at The Zen Investor. The project is to be made up of 25 condo units that are priced at $162,500 – $299,444.

The biggest unit contained in the project is 2,190 square feet, and the complex will include 1 and 2 bedroom and 2 bedroom + den units. 

The site also has posted an article about the development’s possible impact on the neighbourhood and how the developer plans on appealing to a market that doesn’t need to park (there are only 4 parking spots).

Rental properties tax issues

Now that the NB election is over most signs will come down.  Some that might stay up in an effort to sway the newly elected government read “Axe the Double Tenant Tax.” The signs direct readers to www.rentnb.ca.

As the website, The New Brunswick Apartment Owners Association has an information sheet that compares apartment building tax rates in NB and other parts of Canada.  The site indicates that our landlords are being taxed more than those in other areas.  The argument then points out that landlords have to pass this expense onto tenants, making this bad tax policy. 

I’m still forming an opinion on this.  If you have any ideas or information in this regard that might inform my opinion let me know.

Condo ad in City Market

I just spotted this Harbourfront condo advertisement in the City Market and thought it stood out.  The developer must be coming into the home stretch for sales.

Housing start stats

I just read through an interesting article that showed housing start stats for various regions in Canada.  It turns out that the western provinces and NB have more single family than multi-family development.  The rest of the country is the other way around.

Presumably the Quebec, Ontario and BC markets – where multi’s outnumbered single family starts – have cities where this type of housing is accepted and desirable.  With low population, I’d guess, Atlantic and Prairie Canadians want our own space and not cram into central cities.

Harbourfront Condos and the beauty of the internet

One can take on any identity online.  Still, I have faith that JRocca on Skyscraper Page Forum is John Rocca.

JRocca posted this about the Rocca waterfront condo project:

I normally try to avoid commenting on our projects unless there is something serious.
This story was done when I was out of the Country. CBC e-mailed me for a comment on the reason for the delay.I left canada on September 15h and returned October 8th.
Before leaving we advised the condo owners that the start of construction would be delayed until next spring and gave them the supporting information as to the cause of the delay.
The delay is attributable to Council in 2008 not realizing that it needed to vote on 2 motions included in the City manager's report that we all assumed they had voted on when they moved the motion to approve the rezoning.This oversight was discovered by the City Solicitor's office three business days before the purchase date of the land and too late to put the item on the agenda for that Monday's Council meeting.
The need to wait two more weeks to get the motions approved closed the window of opportunity to start and complete the excavation of the undergroung parking before winter freeze up.
We invited buyers to either a 'one on one' meeting or a group meeting after my return to answer any other questions or concerns they had.Most buyers preferred a 'one on one' meeting.Only 8 buyers asked for a meeting and we have met with 7 of them already [including those that were on CBC] .They are as disappointed as we are with the delays but the overwheling majority of them understand that the delays are for reasons beyond our control.
There is a point I would like to clarify about the article itself. Mary Dobson's last comment: "....He has a lot of people's money", has led some people to speculate that delays may be financially good for us.Nothing could be further from the truth.
Delays cost us a lot of money as we need to pay interest on the millions we have invested so far in the project.
We don't have access to the Purchasers' money to help reduce our interest costs.
The Purchasers' money is help in trust by the Law firm of Gilbert McGloan Gillis at the bank of Montreal in an interest bearing account earning interest for the Purchasers not us.
The deposits are only released to us at the closing date.And The closing date is scheduled for 60 days after the buyers are given occupation of their condos.

It’s too bad that we don’t all have the intestinal fortitude/confidence in bureaucracy as Irving Oil on its Long Wharf project (said with tongue firmly in cheek).

I understand why Rocca couldn’t proceed due to not owning the land, but thought this would be a good time to bring up the oddity that is Irving Oil driving piles before they own the land for their headquarters.

One less real estate sales company

Mawhinney Real Estate – the company that recently stamped its name on the bottom of the local phone books – is no more.  Owner Marc Mawhinney was in the newspaper today talking of the closure.

Mr. Mawhinney is quoted in the Telegraph Journal as saying:

"I think, for us, we were growing and we were probably growing too fast, which I've heard. So I would probably admit that to a degree"

Mr. Mawhinney is also among the first to have the honour of attributing business problems to Irving’s announcement that they will not be proceeding with the construction of a second refinery in the near-term.

Hopefully his staff are able to find other work soon.

Condo Culture

I have had some conversations about the tendency of Saint John apartment owners converting buildings to condos.  It seems that many owners have decided that selling their apartments is a better business plan than renting them.

The Telegraph Journal ran an article today titled Condo Culture has arrived.  The article talks about the recent trend of converting buildings to this new ownership structure. 

The Harbourfront condos that are being developed by the Rocca group will be a great addition to the waterfront.  This will be one of the largest housing developments in the city and will play a role in revitalizing the waterfront.

The condo conversions, discussed in the article, will have a different impact.  These new condos will help create a culture of ownership in neighbourhoods where renters (a group I belong to) move in and out.  By attracting owners to rental neighbourhoods, I believe these developments will help create longer term communities.  These communities will be served by residents who will create accountability, due to their ownership stake. 

Lets hope condo culture takes hold.  It should be good for the community.

Computers to blame for Yarmouth foreclosures (in part)

For those of you interested in housing or the issues surrounding the mortgage credit system in Canada I have included this link to a CBC podcast dealing with the foreclosure of over 100 apartment units in Yarmouth, NS:

http://www.cbc.ca/podcasting/pastpodcasts.html?69#ref69

According to the story, potential mortgage fraud is being investigated in the western Nova Scotia town.  Apparently 2 apartment building owners have had 120 apartment units foreclosed upon, leaving many residents homeless after being evicted.

The podcast has an interview that questions the use of automated valuation systems in assigning value to the properties for financing.  The interviewee suggested that had lenders used a professional real estate appraiser, that potential mortgage fraud and inflated purchase prices could have been detected earlier. 

The automated valuation systems are cheaper for lenders in the short run, but the podcast leaves me thinking that having a set of human eyes inspect the properties and investigate the values could have saved lenders some problems and money in this case.

Average rents up, vacancy and availability down

CMHC has released it’s most recent housing stats for New Brunswick.

Average rents in Saint John for Two Bedroom units have gone up 6.5% from $604 to $643 from April 2008 to April 2009. Vacancy went down from 4.3% to 4.0% in the same period. Availability rates also went down.

Even with lower vacancy rates and availability rates, the average rents in Saint John are still lower than in Fredericton and Moncton – likely due to the low end rental units that make up a big part of the Saint John market.

I wonder what story would be told by analyzing median rents.

Room with a view: Do apartments with better views attract premium rents in small markets

I plan on doing some research on this topic.  I wonder if any readers have experience with rent levels of similar apartments, with only the view differing. 

Are rents higher in Saint John when an apartment has a better view?

New house affordability

According to a report published today by CMHC, new house prices went up 4.2% in Saint John, Moncton and Fredericton (February 2008 to February 2009). This rate of growth is higher than the 1.8% nation average.

Multiple Housing Starts up in March

In the Saint John CMA housing starts were down to 44 in March 2009 from 50 in March 2008. The good news in the numbers is that multiple starts were up to 31 starts, 24% more than in 2008. A CMHC press release posted on Daily Commercial News and Construction Record indicates that overall housing starts are also down in Moncton and Fredericton.

The year-to-date multi-family housing starts for Saint John CMA are up 32.3%, with a low 1.2% decrease in overall starts. According to that stats 163 homes were started in 2009 by the end of March, 123 of these being in multi-family developments.

I feel this story shows demand in the Saint John market may be stronger than was assumed when January multi-listing services figures were released earlier this year.

Lending to the 'poor'

I've had a few friends and associates tell me that the cause of the US mortgage and financial crisis was caused by "Bill Clinton" and lending to "risky" poor people.

I have consistently disagreed with this assessment (who's more qualified than me, with an undergraduate degree in economics to make this argument *facetiousness*). Under the category of selection bias, I found a great column on Slate that agrees with me: that greed, not lending to the poor is at the heart of the lending meltdown. While I don't think some of the inflammatory rhetoric used the column is needed, I think the points being made are valid.

Here are some highlights:

• "The Community Reinvestment Act applies to depository banks. But many of the institutions that spurred the massive growth of the subprime market weren't regulated banks. They were outfits ... which were generally not regulated by the Federal Reserve or other entities that monitored compliance with CRA."
• "...the CRA didn't force mortgage companies to offer loans for no money down, or to throw underwriting standards out the window, or to encourage mortgage brokers to aggressively seek out new markets."
• "...lending money to poor people and minorities isn't inherently risky. There's plenty of evidence that in fact it's not that risky at all. "
• "On the other hand, lending money recklessly to obscenely rich [people] can be really risky. In fact, it's even more risky, since they have a lot more borrowing capacity. "

Who will pay how much?

I'm working on a mixed income housing project in the uptown (go volunteerism!). To make a successful project in this context a developer has to mix subsidized units with higher rent "market units."

I think our design is great and the units are some of the best apartments the city will have.

I know that many of the higher end renovated apartments uptown are being rented to workers in Saint John participating in "Energy Hub" projects. If the Eider Rock refinery does not proceed in the next few years, I wonder if there will be adequate demand for "luxury" apartments.

I am hopeful that the demand will exist. I also expect that the demand for this type of unit is more diverse than just visiting professionals. If *new* high end apartments are available in the uptown, perhaps more empty-nesters and KV downsizers will be willing to pay higher rents to live uptown.

House prices rise

A table from the CHMC Housing Now Saint John-Moncton-Fredericton report indicates that house prices in Saint John have gone up significantly over the last year. The table, below, illustrates a trend that is seeing sale prices climb faster than NB's other major cities.

While resale values that are higher and having valuable assets can be good for some families, the rising prices could be keeping affordable housing out of reach for many Saint John citizens.

With a jump of almost $25,000 form the second Quarter of 2007 to the same time this year, who can and can't afford a house is rapidly changing.

If property assessments keep pace with market growth the taxes owed on properties can be expected to increase; hopefully the tax rate can drop to accommodate this change (and keeping tax bills in line with what they are). Hopefully if there are more homes and newer homes pushing up these values, the tax rate could even drop, with a larger assessment base to be thanked.

What's the effect of Heritage Preservation

The city's Heritage Planner, Jim Bezanson, explained in the newspaper today that

• "Consistently, year-over-year, since the (city's heritage conservation) program was put in place, property values (in heritage areas) have increased more than in other areas of the city."

I have two concerns with this statement. First, based on what are the values going up? If this is based on property assessments, one should realize that the city and province have many under assessed properties and assessors work hard at bringing assessments in line with reality. If there is an area that sees frequent renovations and is a popular talking point for politicians/bureaucrats the assessors may be more focused on updating the assessments of these areas. Assessments rising faster doesn't always mean values rising faster, it could just mean assessments are being updated more frequently.

Second, if values are truly rising fast, is the heritage funding and regulation what is pushing values up so quickly? These properties are located in the core near many businesses and sources of employment. The properties are charming. These buildings provide rental income opportunities and large homes for owners. Perhaps these attributes alone would be forcing an acceleration of values. And perhaps, if the market demands heritage properties, owners would be forced by the self interest inherent in a market economy to maintain heritage without the regulations and funding.

Those two questions aside I do suspect the heritage preservation program is somewhat effective at keeping heritage buildings up, though I wish they'd let empty lots be developed more intensively.