Gary K. Louis : MacDonald Realty Westmar : : page 21

The changes are meant to bring transparency to the industry, close loopholes surrounding depreciation reports and help strata owners and corporations more information when it comes to making decisions, the province says.

Rising strata insurance rates are a major financial pressure during what is an already challenging time, Finance Minister Carole James said.

"This is an extremely complex issue playing out in the private insurance industry, but that doesn't lessen our government's commitment to doing what we can to make the situation better," James said.

She said the province first became aware of "significant shifts" in insurance premiums late last year, that went "well beyond any kind of normal market corrections."

Following the first phase of an examination into the industry, James said the reasons for the "skyrocketing" prices are complicated, but the results are not.

"The current situation is unacceptable, and there is no quick fix for this problem," she said.

Announcing the initial steps in a plan to address that problem, James said the NDP government will be looking to amend the Strata Property Act and Financial Institutions Act.

Legislation tabled Tuesday includes a prohibition of referral fees between insurers or brokers and property managers, or other third parties.

B.C.'s finance and housing ministers said the changes will set clear guidelines for what strata corporations are required to do to help condo boards make informed decisions about insurance.

Corporations will also be required to let owners know about insurance coverage, provide notice of policy changes, and let stratas use their contingency reserve fund (CRF) to pay for unexpected increases, if needed.

And ministers James and Selina Robinson claim the amendments will protect owners against lawsuits from strata corporations if they are legally responsible for loss or damage, "but through no fault of their own."

The ministry says these four changes will lead to further updates to B.C.'s regulations:

identifying when strats are not required to have full insurance coverage;
strengthening depreciation reporting requirements (including a limit to use of loopholes to avoid these reports);
changing the minimum required contributions made by owners and developers to the CRF;
strengthening notification requirements of changes to insurance coverage and costs; and
requiring brokers to disclose their commission.

The ministry says those commissions have been reported to be higher than 20 per cent in some cases.

The above list of changes won't be implemented until the province has consulted with strata community stakeholders, the ministers said.

Among the groups being asked to weigh in are the Condominium Home Owners Association of B.C., Insurance Brokers Association of B.C., Insurance Bureau of Canada, Real Estate Council of B.C. and the B.C. Real Estate Association.

An interim report from the B.C. Financial Services Authority, which described the province's strata insurance market as "unhealthy" will also be considered in the consultation period. That report, which was completed at the direction of the finance minister, can be read online.

A final version is expected in the fall.

More than 1.5 million British Columbians live in strata housing, the province said.

When it comes to what exactly is behind the increased premiums, the BCFSA says it's a combination of provincial, national and global factors ranging from property value to earthquake risk.

Written by Kendra Mangione
Producer, CTVNewsVancouver.ca

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New CMHC requirements will have buyers flocking to the market: brokers

Posted on June 9, 2020 by Gary K. Louis PREC

Experts in the real estate industry say CMHC’s new, strict lending measures will trigger a surge in home purchase volume as potential home buyers rush to the mortgage market before July 1, when these policies take effect.

“Whenever there has been a deadline given for a major mortgage rule change,” Ron Butler, mortgage broker at Butler Mortgage, told Yahoo Finance Canada “there has been a distinctly accelerated pace of transactions prior to that change.” Butler described that this has been the case with any rule change that was not immediately invoked.

CMHC’s new measures, which include at least one applicant having a minimum credit score of 680 and a maximum debt service ratio of 44 and gross debt service ratio of 35, mean that prospective home buyers who don’t meet the new requirements have a tight deadline to meet.

It’s an issue that resonates with Jivan Sanghera, mortgage broker at Circle Mortgage Group. Sanghera described a family he has been working with who would have qualified for a $900,000 mortgage before the measures, would now qualify for $790,000, losing about 12 per cent of their purchasing power.

“These are people that have been saving over time, don't have an income interruption and don't perceive an interruption in their income. The credit scores are already fine,” Sanghera explained, “They're being told for no reason other than underwriting rules that they no longer qualify for what they want.”

Sanghera said that with the economy slowly emerging from the COVID-19 crisis and Canadians are beginning to transact again, this is the wrong time for CMHC to introduce these stricter measures. The short-term scramble to be approved for a mortgage and purchase a home in a tightening window will boost the sales-to-listing ratios in a major housing market like the Greater Toronto Area.

“Now you are going to put further short-term pressure on prices,” Sanghera explained, “What is being solved here other than reducing risk for the bank? That's the only thing I keep seeing this come back to.”

In a press release, CMHC president and CEO Evan Siddall explained that the measures were to “protect home buyers, reduce government and taxpayer risk and support the stability of housing markets while curtailing excessive demand and unsustainable house price growth.”

Sanghera responded. “Of course, we do not want people to be overextended. In the same regard, at what point is CMHC intervening in a free market?” he asked.

Ben Rabidoux, president of North Cove Advisors, doesn’t agree with the ‘free market’ characterization of the mortgage market. “The entire mortgage lobby has a direct federal guarantee and multiple layers of direct federal guarantees that subsidized them, so cry me a friggin’ river,” Rabidoux told Yahoo Finance Canada.

“The government from time to time has the right and should be re-evaluating their position given the changing risk landscape. That's how that's supposed to work. It's not a free market.”

CMHC also said in their statement that the aim of some of these measures would help manage the risk to their insurance business.

Butler noted that the soaring household debt levels in Canada, much of it driven by mortgage debt, are a factor in the CMHC decision.

“At the end of the day, an insurance company has to wisely consider how to operate their business.”

From CMHC to the private sector

As CMHC tightened its measures, it left many who analyze the industry wondering what the next step for private companies will be. Around the same time CMHC elected to tighten its measures, HSBC introduced a record-low 1.99 per cent rate on a five-year fixed mortgage. It was the first bank to break the two per cent barrier on the five-year fixed, according to Rate Spy.

“At this point, the big question is whether the private insurance will follow suit,” said Rabidoux.

On Monday, Genworth MI Canada Inc. announced that it has no plans to follow CMHC’s lead on tightening mortgage requirements. The standards to debt service ratio limits, minimum credit score and down payments are expected to stay the same. Canada Guaranty Mortgage Insurance Company has yet to comment on whether or not it will follow CMHC’s mandate.

“I think the biggest change is the debt service ratio. That's the one that has the potential to be quite disruptive,” said Rabidoux, adding that there could be a potential workaround in the private space.

Source
Stephanie Hughes
Financial Journalist
Yahoo Finance Canada

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5 23740 DYKE ROAD Richmond, Richmond, BC

Posted on June 2, 2020 by Gary K. Louis PREC

I just finished uploading this Townhouse for sale, 5 23740 DYKE ROAD Richmond, Richmond, BC

A rare opportunity to own in an exclusive Richmond townhame community! Located at the Fraser River's edge, this fully detached 3 bedroom, 4 bath home also has a media roam, den, parking for 6 cars and an elevator! With top of the line appliances by Wolf and Sub-Zero and a 2,800 sq. ft. layout designed for entertaining, this meticulously cared for property is a must seal Enjoy sunsets on your sunny southern exposed deck. Moor your boat at the marina in your backyard. Enjoy nature at your doorstep. A unique property that must be seen to be appreciated! Professionally measured by PixlWorks

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2601 1233 W CORDOVA STREET, Vancouver West, BC

Posted on March 24, 2020 by Gary K. Louis PREC

I just finished uploading this Condo for sale, 2601 1233 W CORDOVA STREET, Vancouver West, BC

CARINA, COAL HARBOUR. Award winning architecture by James Hancock in this prestigious waterfront address. Over 5,400 sf of indoor/outdoor privileged LIVING, encompassing the entire 26th floor. ONE EXCLUSIVE PRIVATE PENTHOUSE, with over 1,100 SF of wrap around terrace, ideal for grande scale entertaining. 3 elegantly appointed master bedrooms w/ lavish ensuites, a massive media room, office…and more! Inspirational space with endless possibilities... Gallery walls for an art lovers dream... a masterpiece of architecture... a residence in pristine condition. 360 degrees of breathtaking views! Resort style amenities include 24 hr concierge, fitness facility, media rm, pool, hot tub, steam room, lounge & electric car charging stations. World class location… world class waterfront living.

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