Home prices will continue rising rapidly across broad swaths of Canada in 2021 as low housing supply forces buyers into fierce bidding wars.

That’s the message RBC Senior Economist Robert Hogue is sharing in the bank’s 2021 housing market outlook, published today.

Titled “Canada’s housing market headed for another record year in 2021,” the report identifies robust pre-pandemic housing demand that was carried forward to 2020’s second half as the primary reason why supply is so diminished across many provinces and major regional markets.

Hogue wrote that active home listings in late 2020 were significantly lower than the 10-year average in Ontario, Quebec, most of Atlantic Canada and BC.

“And that’s despite a surge in downtown condo listings since spring in Canada’s largest cities. With so few options to choose from (outside downtown condos), buyers will continue to compete fiercely,” he wrote.

Stiff buyer competition means prices will continue their swift upward march in these provinces, with Hogue predicting a 9.6 percent rise in Ontario for 2021. Quebec is forecast to record a nine percent jump, while BC is pegged for an 8.6 percent increase in property values.

Rather than fixating on the large urban markets in these provinces, the economist was quick to point out that rising prices isn’t just a “big-market story.”

“The pandemic has heated up prices in smaller markets too. In fact, we could see stronger gains in smaller markets than in core urban areas because downtown condo prices are likely to stay flat through much of 2021,” Hogue wrote.

Voracious demand for detached houses returned to Canada’s housing market last year, and just as in years past, unlucky buyers settled for townhouses.

“The reason the townhouse has become more popular than ever in the new construction world is, whether they’re traditional, stacked or back-to-back, they’re less expensive than detached homes, which average more than $1 million in the GTA,” said Mark Cohen, managing partner of The Condo Store in Toronto. “As a result of prohibitive pricing for detached houses, which hiccupped a couple of years ago but bounced back, and because there’s a general shortage of housing, townhouses have come into greater focus as an alternative.”

Townhouses came back into focus in 2020 because the COVID-19 pandemic trapped people, many of whom lived in condos, inside their homes for months, and when the Bank of Canada dropped interest rates, they saw their opportunity to buy a larger home. Unfortunately, the chance to borrow cheap money attracted homebuyers previously priced out of the detached market, and those unable to buy them alternatively sought townhouses.

The average price of a detached house in the GTA was $1,150,529 last year, which increased by 13.2% from 2019, according to the Toronto Regional Real Estate Board (TRREB). Conversely, townhouses averaged $734,921, rising by 11.4% year-over-year. Condominiums, which are significantly smaller than townhouses, averaged $629,491 last year.

“Townhomes always offered, on a price per square foot basis, much better value than condos, which are designed with the highest amount of efficiency and lack of wasted space,” said Cohen. ”But part of that is driven by the fact that they’re expensive—for example, the costs of concrete and underground parking are expensive, and because you spend $900-1,500 psf on a condo, certain things you might find in a house, like storage, become expensive.

“Townhouses often give you more anti-space and transitional space, and that’s closer to living in a detached home than an apartment. As a result, space is less expensive and you effectively get more for less. From a spatial perspective, townhomes offer more for less, and from a maintenance fee perspective they could be zero or negligible. There are no real expenses associated with amenities.”

Investors have also turned their attention to townhomes because they noticed the pandemic sparked desire in people for more space, and just as there are only so many detached houses for sale, there are even fewer townhouses—there were 46,359 detached sales in the GTA last year, but only 16,444 involving townhouses.

“With more people working from home, two-storey living makes sense for a variety of reasons,” said Cohen. “Investors are keen on trends and realize townhouses make sense because they allow people to functionally live and work at home at the same time.”

A report from the Canadian Centre for Economic Analysis (CANCEA) a few year ago shone a light on the dearth of so-called missing middle housing—defined as multiplexes, semi-detached, rowhomes and townhouses—in the GTA, and according to Michael DiPasquale, a CPA and COO of Dunpar Homes, the pandemic inadvertently renewed interest in these housing types.

In fact, added DiPasquale, many developers recently nixed planned high-rise developments in favour of mid-rise boutique or stacked townhouse projects, indicating that the shortage of crucial forms of housing CANCEA warned about might finally be addressed.

“Missing middle housing is more affordable for the average person and you don’t have to deal with elevators or be downtown, which is still accessible with transit or by driving a short distance,” he said. “I would say that the missing middle question has been answered because people see the need for it and the need for more space.”

Dunpar Homes has developed many infill townhouse projects just outside Toronto’s core over the years, changing the complexion of neighbourhoods in the process, and 2020 was no different. Parts of the GTA, like south Etobicoke and Streetsville in Mississauga, are prime locations for missing middle housing because Toronto’s downtown core is nearby.

“Townhouses, stacked townhouses or semis—products for people who don’t want to be in condos and can’t afford detached—fill the gap, and it’s been an issue for years,” said DiPasquale. “COVID has ramped up focus on solving the missing middle because it’s nice to have two or three bedrooms and 1,500-2,000 sq ft as opposed to 500-600 sq ft in a condo.”

The Toronto Regional Real Estate Board released its 2020 housing figures this week. And I suspect that the numbers are probably directionally similar for many city regions around the world.

2020 saw more home sales than 2019 with 95,151 homes changing hands. This represents an 8.4% increase compared to last year. December was also a record month with 7,180 sales — a 65% year-over-year increase!

The average selling price in the Greater Toronto Area also reached a new record of $929,699. This represents a 13.5% increase compared to last year. Once again, December was a record setting month with an average selling price of $932,222.

When you look at sales and average prices by home type, the biggest drivers were low-rise homes outside of the city. No surprises here.

 

 

 

But consider the price spread that now exists between condos and detached homes. In the City of Toronto (“416”), we’re talking about an average price delta of nearly $850k. That would be an expensive home in many other markets.

Of course, condos tend to be smaller than detached homes. And so different prices per pound. But total price matters a great deal and historically a widening spread has moved many buyers over to the condo market.

Condo sales soared across the Toronto region in December, and as one economist wrote, it looked like buyers were out “in full force looking for bargains.”

While roaring detached home sales and skyrocketing prices have stolen the lion’s share of the headlines in recent months, it now appears that condos are mounting a comeback, at least when it comes to sales activity.

After the Toronto Regional Real Estate Board (TRREB) released its December sales and pricing data earlier this week, RBC Senior Economist Robert Hogue wrote that condo sales caught his attention.

He acknowledged that the challenging rental market is still pushing investors to offload their units, causing condo supply to surge and prices to continue to post only modest gains in suburban communities and fall by nearly five percent in Toronto-proper.

That said, Hogue observed that sales spiked 75 percent across the Toronto region, with similar strength seen in both city and suburban markets as “softer condo prices are now drawing more buyers in.”

In 2021, the economist is predicting that condos’ affordability advantage over detached homes will allow demand to pick up even more steam.

Of the four distinct property types tracked by TRREB, only townhouse sales in the region’s 905 area posted higher annual percentage gains than condos.

In terms of overall sales volume, detached homes still significantly outsold condos across the region, but the gap between the two property types narrowed. In November, detached homes outsold condos by 2,190 units at the regional level. By December, the gap had narrowed to 845 units separating detached homes and condos.

It’s also worth noting that Toronto region condos were the only property type to post a monthly sales increase in December. Detached, semi-detached and townhouses all saw activity decline from November to December.

With the COVID-19 pandemic forcing us to spend more time indoors, the desire for bigger homes among luxury buyers across the Greater Toronto Area has pushed sales in some expensive price categories to new highs.

GTA luxury home sales priced between $3 million and $4 million broke a record in 2020, according to new data published this week by RE/MAX Ontario-Atlantic Canada.

One thousand and sixty-two freehold and condo properties over the $3 million mark changed hands last year, about one percent higher than the previous all-time high achieved in 2017, when 1,047 homes in the same pricing category sold. Sales over $3 million in 2020 were also up over 55 percent from 2019, when 682 transactions were recorded.

Sales at even higher price points — the $4 million and $5 million categories — also rose from their 2019 totals, but did not exceed the highs achieved in 2017.

“A combination of both economic and psychological drivers contributed to a robust upswing in demand, influencing one of the greatest pivots in the GTA’s housing market history,” said Christopher Alexander, Chief Strategy Officer and Executive Vice President of RE/MAX of Ontario-Atlantic Canada, in the report.

While economic stimulus, like rock bottom mortgage rates, played a role in the market’s surge in homebuying activity, RE/MAX Ontario-Atlantic Canada explains that COVID-19 lockdowns were the true catalyst for the uptick.

The desire for home offices and more personal space were attributed as the driving forces behind luxury buyers seeking larger homes in 2020, often in less densely populated areas that sometimes fell outside of suburbs immediately surrounding the city. For instance, freehold sales over $3 million in Halton region increased by 188.8 percent annually, jumping from 45 to 130 sales.

“This same pattern played out in major urban centres in the US such as New York City and San Francisco where the pandemic has tipped the scales in favour of a more suburban lifestyle,” explained Alexander.

“And while demand is still strong in the 416, where luxury freehold sales represent 59 percent of total sales, performance in suburban areas, especially those north and west of the city, is particularly noteworthy,” he added.

If you think activity in Toronto’s condo market has decelerated, think again.

“The information that’s not being reported, but that I see because I have to approve these and sign off on each one of them, is there are a lot of assignment sales right now,” said Sam Crignano, president of Cityzen Development Group. “This is information that isn’t reported on the MLS. The market is not as quiet as people think. It’s active, and I would say in a good way.”

Indeed, according to Toronto Regional Real Estate Board data for November, condo sales in the City of Toronto rose by 0.8% year-over-year. And while investors flip assignments all the time, being a landlord in today’s condo market, which has been infused with a glut of supply courtesy of a heavily regulated, and shrunken, short-term rental pool, has lost its lustre. That doesn’t mean the condo units aren’t still worth a lot of money, though.

“What we’ve seen recently, because the rental market is somewhat soft, is people are choosing to sell their assignments rather than hold onto them long-term,” said Crignano. “In buildings we’ve finished in the last six months where investors are selling assignments, they’re selling at a decent profit that’s still a discount to today’s market value. If they bought at $800 per sq ft a few years back, the market appreciated. New condos today are at $1,200-1,300 per sq ft, but a lot of investors are selling at a price that’s closer to $1,000 a sq ft. End users are taking advantage of lower prices and historically low-interest rates, which has created relatively cheap money.

“As much as people think the condo market is dead, it really isn’t.”

In fact, as Howard Cohen explains, end users are often unwilling to wait three to five years to occupy their new home, but investors rarely flinch when they put a 20% deposit down on a preconstruction unit. With Toronto condo prices declining by 3% year-over-year in November, end users are likely circling.

“If a condo costs $600,000, you need $120,000 cash deposit, and not a lot of people have that, but investors do and they’ll buy the unit,” said Cohen, president of Context Development. “Three years later when they decide to sell it, somebody can buy it using a 5% down payment with CMHC’s help. So the $600,000 unit might now be worth $800,000, but the buyer only needs $40,000 to buy it. Investors get a bad rap but they really do fuel the housing market for a lot of people.”

Assignment flips can net hefty returns, particularly for units on higher floors, but the developer must first sign off on them—which they aren’t likely to do if their building still has units for sale. Crignano says that isn’t usually a problem in Toronto.

“If I have a building completely sold out, they’re not competing with units I have for sale, and on that basis I’d grant permission for them to sell the assignment,” he said. “However, if I have plenty of units left for sale, I’d obviously want to sell my units first before I allow assignments, but the market has been so strong the last two years that most developers are sold out and grant assignment sales to purchasers.”

Canadian landlords have endured a difficult 2020, but there is one metropolis that, according to a Rentals.ca report, is brimming with investment opportunity.

“Montreal is expected to be the top major market in Canada next year with rent growth of 6%, rising from $1,665 per month forecast for December 2020 to $1,760 per month,” the report said. “There is clearly no urban exodus in Montreal despite the strong rent growth in 2019, and the above-inflation increase in 2020, average rents are still relatively affordable in comparison to Vancouver and Toronto.”

In the Montreal region, which Rentals.ca called “a bright spot for landlords in Canada,” rents rose by 9% year-over-year to $1,454 for one-bedrooms in November, although rents were down 1.4% from October. Two-bedroom units in the City of Montreal increased by 5.1% year-over-year to reach $1,889 last month, and also rose by 0.4% from October.

However, if 2020 has been any indication, landlords in the Greater Toronto Area aren’t likely to see rents increase in 2021, at least to start the year.

According to the report, the city’s rents declined for 12 straight months in November, as the infusion of supply into Toronto’s long-term rental pool and a scarcity of renters have softened the market.

A one-bedroom unit in the GTA averaged $1,877 last month, plunging by 19% year-over-year and 2.3% month-over-month, but it’s still the highest in Canada. A two-bedroom unit in the region averaged $2,468, falling by 17.2% from November 2019 and by 2.6% from October.

“The average property for rent in Toronto is now $520 cheaper per month in November of this year compared to November of last year,” said the report. “The average rent dropped by a whopping 20% annually to $2,081 per month, lower than Mississauga. On a per-square-foot basis, the average rent declined from $3.60 PSF to $3.12 PSF, a decline of 13%.”

Short-term rental regulations and a dearth of international students, most of whom fled Canada when the COVID-19 pandemic struck and catalyzed lockdowns, has resulted in a proliferation of condo units in the City of Toronto that has rendered condo rentals the weakest segment of the regional real estate market.

“We’ve monitored the market and, pre-COVID, we had 4,500 rental condos units available in Toronto, and in August the number grew to above 10,000 units,” said Alex Balikoev, senior vice president of sales at Sotheby’s International Realty Canada. “The reasons for that were job losses and a drop in immigration.”

The average rent in Canada, according to Rentals.ca listings, was $1,743 in November, which declined by 9.1% year-over-year and by 2.2% month-over-month.

The average rental price of a one-bedroom unit in Vancouver was $1,865 in November, falling by 5.2% from the same month in 2019, and by 1.9% from a month earlier, while a two-bedroom unit averaged $2,636 last month, which is a 13.8% year-over-year decline and a 2.8% month-over-month drop.

“In November of last year, the average rent in Vancouver for all property types on Rentals.ca increased by 7% annually to $2,507 per month,” said the report. “A year later, the average rent is down 12% year-over-year to $2,216 per month.”

The term “foreign buyer” is often used pejoratively in Canada—it’s become synonymous with speculators who have nary a vested interest in the country apart from using empty homes as appreciation vehicles, to the detriment of the domestic population—and it couldn’t be more misguided.

Turns out, many of these new Canadians bolster the national economy in ways few people can, and it is not without personal risks, either. Richard Leuce, an immigration consultant and owner of Richard’s Business Immigration Corp., specializes in high-net-worth individuals from South Africa, most of whom yearn to replicate their success in a safer environment.

“South Africa is a beautiful, beautiful country—I fell in love with it the minute I landed there—but it’s not very safe, and a lot of times South Africans, who are ready to invest hundreds of thousands of dollars, are looking for safety,” Leuce told CREW. “My clients’ intents are to become Canadian citizens. Their first language is either English or Afrikaans, and if that’s the case then English is their second language. They seek to become permanent residents as soon as possible; they’re not just coming to buy properties and leave them vacant.”

Leuce primarily works through the Ontario Provincial Nominee Program (PNP), which requires his clients to create business plans, pass interviews with Canadian immigration officials, and take an exploratory trip to the region of the province where they want to set up shop. But Leuce says it isn’t as simple as it sounds.

“After all of the relevant information is submitted, the province scores the applicants and, if successful, follows up with a performance agreement, which stipulates that the nominee has up to two years to meet all requirements, including investing at least $600,000 and creating high-paying jobs,” he said. “They’re not hiring family members; they have to hire Canadian citizens. They invest money and boost the economy here. They did it in South Africa and they want to do the same thing in Canada. They’re active contributors to the economy.”

Among the many innovative ideas from abroad that Leuce has helped turn into Canadian companies is a plastic recycling firm that hopes to assist Canada achieve its zero plastic waste by 2030 goal. Not all ideas have to be bankrolled by the applicant.

“In a lot of developing economies, you have people with these great, innovative ideas, but who may not have the money,” said Leuce. “For these individuals, the Start-Up Visa program is an excellent avenue. The entrepreneur with the idea enters into a partnership with a Canadian angel investor or venture capital firm already in Canada to bring the idea to fruition using the latter’s money.”

The Canadian government announced in November that it would welcome 1.2 million new immigrants into the country through 2023, 60% of whom Immigration, Refugees and Citizenship Canada (IRCC) described as belonging to the “economic class,” which includes skilled workers, investors and entrepreneurs. But the second wave of the COVID-19 pandemic may prove a spanner in the works, warns Leuce, because processing times have already ballooned and the country’s ambitious goal to settle record numbers of immigrants in each of the next three years might not be attainable.

“The second wave will slow everything down. The door is not closed, but there will be a slowdown and it will take a while until the backlog is cleared. I’m curious to see if, in the spring budget, [IRCC] gets additional funding to hire more officers, or gets the money to pay existing officers overtime, because if the agency doesn’t get an increase in its budget, there’s no way things will move along. The spring budget will be the biggest indicator.”

Yesterday, Altus Group released its seventeenth annual Canadian Property Tax Rate Benchmark Report, a study of the commercial and residential property tax rates in eleven of Canada’s major population centres. The report found that for the third year in a row, eight of the eleven cities studied have commercial tax rates that are at least double that applied to residential properties.

For 2020, the five cities with the highest estimated commercial property taxes per $1,000 of assessed property value are:

  • Montreal – $36.99 per $1,000
  • Quebec City – $35.03 per $1,000
  • Halifax – $34.41 per $1,000
  • Ottawa – $26.64 per $1,000
  • Winnipeg – $23.17 per $1,000

The cities with the three lowest commercial tax rates per $1,000 of assessment were Vancouver ($6.73), Saskatoon ($15.65), and Regina ($17.31).

Vancouver’s rate was the most dynamic compared to 2019, shrinking 27.9 percent year-over-year. According to Terry Bishop, Altus Group’s president of property tax in Canada, the change in the commercial tax rate in Vancouver reflects a key realization on the part of city managers.

“I think they probably knew that they were leaning a little too much on the commercial sector,” Bishop says. “With the economic fallout of COVID coming along, I think they saw an opportunity to provide some relief to businesses. They’re the only city across the country that did anything significant on the property tax abatement side.”

While not on the same scale as Vancouver, Calgary lowered its commercial tax rate by 11.9 percent in 2020. But in Cow Town’s case, the decrease was more the result of the desperate situation faced by many of the city’s businesses, who had been asked to pay higher property taxes in each of the previous three years.

“It was getting to the point where businesses couldn’t afford the taxes that they were paying,” Bishop says. “The city had to bite the bullet and increase residential rates and reduce commercial rates.”

Of the other four markets that saw their commercial tax rates fall, only two, Toronto and Winnipeg, experienced declines of greater than four percent. The biggest year-over-year rise in commercial rate occurred in Saskatoon, where it grew a modest 2.6 percent.

Residential tax rates were largely unchanged, with the national average of residential property taxes per $1,000 of assessment for 2020 coming in at $8.98, a penny less than a year before.

The highest residential property taxes this year can be found in Halifax, where they are $11.96 per $1,000 of assessment, Winnipeg ($11.94), and Ottawa ($10.85). They are lowest in Vancouver ($2.92), Toronto ($5.99) and Calgary ($7.52).

As with commercial properties, Vancouver and Calgary also saw significant movement in their residential rates. Vancouver’s increased 14.2 percent year-over-year, while Calgary’s rose by 13 percent.

The ratio
Taking the commercial and residential data one step further, Altus Group calculated a commercial-residential tax ratio for each city. Bishop says the ratios may be the most important data point the study has to offer, as they speak to the disproportionate share of the property tax burden commercial owners are asked to carry.

“I think it’s more important to watch the trend in the ratios from a fairness and equity point of view than the actual tax rate,” he says.

Because property taxes account for a large portion of the rent paid by most businesses, and because they represent one of the most onerous operating costs for business owners that own their own properties, Altus Group fears that small businesses required to pay an outsized proportion of a community’s property taxes will face serious competitive challenges. If they can’t survive in their current marketplace, they may be enticed to move to a new location where the tax burden is significantly lower.

“It’s important that municipalities are aware of that and don’t lean on them too hard,” Bishop says.

This year, the highest ratios were found in Montreal (4.1), Toronto (3.6), and Quebec City (3.5). The cities with the lowest ratios were Saskatoon (1.7), Regina (1.7), and Winnipeg (1.9).

For the first time, Altus Group also studied the separate impacts municipal and provincial governments play in determining each market’s commercial-residential ratio. In Calgary, Edmonton, Montreal, Quebec City and Halifax, it was found that the higher-than-average ratios are being driven by municipal taxes, while the high ratios in Toronto and Ottawa are largely the result of provincial education levies.

Bishop admits that reducing property taxes is a tough sell for provinces and municipalities scrambling to make up the tax revenue lost as a result of COVID-19-triggered business closures. But asking businesses to keep paying their current tax rates when so many are on the verge of collapse isn’t the rosiest of alternatives.

“To expect to recover the same amount of taxes from those businesses when their revenues are down significantly,” he says, “is a tall order.”

The right time to buy things is usually when other’s aren’t, which is why I’ve felt that this year was a great time to buy a centrally located condo. Cities aren’t going anywhere. This isn’t their first pandemic. Downtown demand will return as soon as urban life returns and the majority of people are back in their offices next year.

I’ve also been predicting that the run-up in single-family home prices that we have seen this past year here in Toronto will eventually lead to a surge in demand for condos (and perhaps even for larger suites). It’s a question of relative affordability. And so it was interesting to see Shaun Hildebrand of Urbanation predicting the same thing for 2021 in this recent Toronto Star article.

Hildebrand thinks the soaring prices of single-family homes will also push more buyers back to the condo market.

As of November, the average price gap between condos and detached houses was $596,000. The gap between a condo and a semi-detached or townhome was about $217,000. Both of those were at their second-highest levels since the market peaked in late 2016-early 2017, he said.

“This could really start to swing demand towards condos in the second half of the year,” said Hildebrand.

Realosophy data shows condo sales were already up year over year prior to the holidays —

23 per cent the first week of December,

31 per cent the second week and

72 per cent the week of Dec. 14.

That means 727 condos sold that week, compared to 418 in the same week last year.

Urbanation just released its Q3-2020 market update for the Greater Toronto Area and the data is very encouraging for the new condo market. Here are some of the highlights:

  • There were 6,730 new condominium unit sales in Q3. This represents a 30% year-over-year increase.
  • More of this growth happened in the suburbs (905) with 3,834 units sales vs. 2,536 unit sales in the City of Toronto (416).
  • Of the 6,694 units that launched for sale in Q3, about 3/4 of them sold. This is the highest absorption rate since Q4-2017.
  • The average selling price for a new condo launched in Q3 was $1,044 psf (GTA average). This is up 3.5% compared to last year.
  • New launches in the suburbs sold for an average of $915 psf. New launches in the City of Toronto sold for an average of $1,275 psf.

I reckon that many of the people purchasing right now are looking through and to the other side of this current macro environment. They recognize that things will get better and that the Toronto region will continue to thrive. That’s certainly how I’m thinking about it.

It goes without saying that 2020 was an unprecedented year, and that the ripple effect on the housing market was swift and notable. Across the country, home buyers, sellers, and renters re-evaluated their housing priorities as they navigated the COVID-19 pandemic, and many local housing markets saw several months of record-breaking sales following a spring of record-breaking declines.

As we look forward to 2021, here are 5 housing market trends that everyone has their eye on going into the new year.

1. 18-Hour Cities Across Canada Will Continue to Drive Housing Demand
A common mantra you hear in real estate is: location is everything. One of the major implications of the pandemic was that it pushed home buyers to reconsider the scope of how location factored into their home purchase.

With remote-working options becoming commonplace across the country – and some companies making them permanent – a growing group of home buyers in dense, major cities like Toronto began prioritizing square footage and green space, where they may have previously put a premium on workplace proximity.

Not only did this result in skyrocketing demand for single-family homes in general, it also spurred many buyers to expand the boundaries of their home search far beyond city-limits. Many looked to 18-hour cities, often defined as “mid-size cities with attractive amenities, higher-than-average population growth, and a lower cost of living and cost of doing business than the biggest urban areas” to find better value.

For example, in Ottawa, home prices rose 19% year-over-year in November, and competition remained fierce among prospective buyers. “With huge buying demand being fueled by out-of-town buyers transitioning to the Ottawa market, we can expect prices to be driven up in the new year,” said Jonathan Amodeo, Broker in Ottawa.

Generally speaking, with increased flexibility to live and work anywhere, we can expect home buyers to continue to look further for affordable, spacious, single-family housing, which in turn is expected to drive demand within these cities and consequently put upward pressure on home prices as has been the trend in 2020.

2. ‘Typical’ Seasonal Real Estate Cycles Will Return And Buyers WIll Face Strong Competition
As most of the country came to a stand-still in March following stay-at-home orders, the economic and healthcare repercussions of the pandemic also brought the spring housing market to a halt; with record-breaking declines in prices and sales.

In response, the real estate sector as a whole pivoted to a virtual-first model, and as conditions improved, real estate boards and associations across the country implemented stringent safety protocols to prioritize the safety of the community at-large. As healthcare conditions eased over the summertime, pent-up demand, and limited inventory resulted in what many described as a “delayed spring market” effect, which in turn led to the record breaking sales experienced throughout the rest of the year.

Based on today’s expectations of an approved COVID-19 vaccine being rolled out in the coming weeks and months, plus an entire real estate industry that now has experience safely working within the framework of COVID-19 as we know it, buyers and sellers can expect for more traditional real estate cycles to reemerge in 2021 – with the market being at its busiest in the spring and the fall.

In fact, a recent report found that housing competition strongly favoured sellers in every single one of 25 major Canadian housing markets; with some of the most competitive conditions existing outside of Canada’s largest housing markets of Toronto and Vancouver – in Canada’s mid-sized cities. We can expect this trend to continue, as more Canadians who are seeking out more square footage and green space are willing to look further for housing.

3. Condo-Dense Markets Could See An Uptick in Rental Demand
Widespread closures across workplaces, universities, and the Canadian border to tourism and immigration alike resulted in rental vacancies rising to 2.8% in condo-dense markets like Toronto this past October (from just 0.7% the year prior), and at the highest levels for the first time in over a decade. Low demand spurred an increase in new listings and a consequent drop in rental prices, particularly across the city centre, and in areas popular for short-term rentals.

If the border opens up, and life begins to trend closer to what it was like pre-pandemic as a result of the vaccine, we can expect demand for rentals to grow again in city centres, particularly in the latter half of the year. For now, “if a renter is looking to get into a beautiful, trendy downtown condo at a prime location, now is a great time to lock it in,” said Andrew Kim, an agent in Toronto.

4. Mortgage Rates Will Remain Affordable
In response to the pandemic, the Bank of Canada kept the overnight lending rate at it’s “effective lower bound” of 0.25% for much of the year, with plans to maintain this rate until “economic slack” from the pandemic is absorbed, which is likely to be until at least 2023. Mortgage rates in turn, remain at an all-time low, with fixed mortgage rates hovering near the 1% mark.

Based on the Bank’s guidance, we can expect the overnight lending rate to remain steady for much of 2021 as the economy reacts to short term spikes in COVID-19 cases, and recovers over the long term as the vaccine is rolled out.

As far as mortgage rates go, there is potential for a slight increase in fixed rates as the bond market recovers in response to vaccine news and rollout. This in turn could impact the rate at which real estate prices rise toward the latter half of the year.

5. The Housing Market in the Prairies Could Get A Boost
The Prairies have been hard-hit by the coupling effect of the pandemic plus the ongoing impact of fluctuations in the energy market on jobs and consumer debt and spending. That being said, housing competition remains fierce in the region, with all major areas in the region experiencing strong seller’s market conditions this fall, e.g. Winnipeg (SNLR of 88%), Saskatoon (SNLR of 82%), Calgary (SNLR of 87%) and Edmonton (SNLR of 76%). Generally speaking, when the SNLR or sales-to-new-listings ratio is over 60%, competition conditions favour sellers over buyers because demand outpaces available supply.

With average home prices under the $500,000 mark across the Prairie region’s largest cities, if the world starts turning again and the economy and immigration into the region begins to recover in response to the vaccine, we can expect that the housing market in the Prairies may start to bounce back later in the year.

Last week, the Canadian Real Estate Association (CREA) released its latest resale housing market forecast, which revealed that — despite turbulent spring months — homebuyers are on track to set a record for activity in 2020, with some 544,413 homes projected to change hands by December 31, an 11.1% increase from 2019 levels.

Subsequently, the national average price in 2020 is on track to rise by 13.1% on an annual basis to just over $568,000 — reflecting the current balance of supply and demand, which heavily favours sellers in many local markets.

In Ontario, CREA forecasts that 228,665 homes will change hands by the end of the year, up 9.2% from 2019 levels,. While the average price should rise 17% to $708,377, up from $604,883 in 2019.

CREA’s forecast noted that mortgage interest rates have declined to record lows in 2020, including the Bank of Canada’s benchmark five-year rate, which is used by major banks to qualify applicants under the federal mortgage stress test, which has lead to more buyers being able to qualify for mortgages this year.

With the Bank of Canada committing to keep interest rates low into 2023 and with mortgage interest rates expected to remain near current levels through the new year, CREA forecasts 2021 will still be a strong year for sales.

“On a monthly basis, sales are forecast to ease back to more typical levels throughout 2021,” CREA wrote in the report. However, presuming there’s a more normal spring market in 2021, the year as a whole is expected to see more home sales than 2020.”

On a national level, CREA is predicting 584,000 home sales for 2021, up 7.25% year-over-year. All provinces except Ontario are forecast to see increased sales activity in 2021, as low-interest rates and improving economic fundamentals allow people to get into the markets where homes are available for sale.

For 2021, CREA has predicted that there will be 221,220 home transactions in Ontario, a decline of 3.3% from 2020 levels. However, average home prices are expected to climb 16.3% to land at $823,656.

“Ontario has seen strong demand for several years, particularly outside of Toronto, which has eroded active supply in the province,” CREA said in its report.

“The strength of demand, particularly for larger single-family properties, will drive the average price higher as potential buyers compete for the most desirable properties.”

 

This forecast comes as Ontario’s housing market was down on a year-over-year basis in November, however, this reflected a supply issue rather than a demand issue — particularly in the ground-home segment. This has led to the average home price in the province remaining up year-over-year.

The largest year-over-year gains in November — between 25- 30% — were recorded in Quinte & District, Tillsonburg District, Woodstock-Ingersoll and a number of Ontario cottage country areas.

Year-over-year price increases in the 20-25% range were seen in Barrie, Bancroft and Area, Brantford, Huron Perth, London & St. Thomas, North Bay, Simcoe & District, Southern Georgian Bay, and Ottawa. This was followed by year-over-year price gains in the range of 15-20% in Hamilton, Niagara, Guelph, Cambridge, Grey-Bruce Owen Sound, Kitchener-Waterloo, Northumberland Hills, and Peterborough and the Kawarthas.

Moreover, prices were up in the 10-15% range compared to last November in Oakville-Milton and Mississauga. Across the GTA, the average selling price for all home types was up by 13.3% to $955,615.

With just ten days left in 2020, CREA is far from alone with its predictions around average home prices increasing in the new year. James Laird, co-founder of Ratehub.ca, expects detached home prices will increase between 4 to 7% in 2021, with the strongest growth in the suburbs around major urban centres.

“With Canadians working from home, the demand will continue to be strong for more space. Larger homes outside of the city centre will see the strongest demand,” said Laird.

What’s more, Royal LePage, predicts that the median price of a standard two-storey home in the GTA will rise 7.5% next year, reaching an average price point of $1,185,800. In a significantly less dramatic increase, the median price of a condominium is forecast to increase 0.5% to $600,800.

Meanwhile, the aggregate price of a GTA home (all home types) is expected to increase by 5.75% year-over-year, ultimately reaching $990,300.

Looking ahead, only time will tell how the housing market will truly perform, but for now, let’s hope 2021 holds as much good news as suggested by the forecasted increase in home prices in the region.

December 15, 2020 – The national average price is forecast to rise by 9.1% in 2021 to $620,400. Average price trends across Canada in 2021 are generally expected to resemble those in 2020. Shortages of supply, particularly in Ontario and Quebec, are expected to result in strong price growth, while Alberta and Saskatchewan are anticipated to see average prices pick up following several years of depreciation.

Ottawa, ON December 15, 2020 – The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate boards and associations.

Current trends and the outlook for housing market fundamentals suggest activity will remain relatively healthy through 2021, with prices either continuing to climb or remaining steady in all regions.

Economic activity continues to improve slowly following the initial stages of the pandemic. Over the past several years, record levels of international immigration, low interest rates and an increasing share of millennials entering their home buying years have helped make the housing market a significant source of strength for the Canadian economy. The recent government support programs for individuals and businesses have also helped the overall economy through the most severe parts of the pandemic to date.

Mortgage interest rates have declined to record lows in 2020, including the Bank of Canada’s benchmark five-year rate used by Canada’s largest banks to qualify applicants under the B-20 mortgage stress test. With the Bank of Canada committing to keep interest rates low into 2023, mortgage interest rates are expected to remain near current levels through 2021.

Recent national sales trends have improved more than anticipated over the second half of 2020. New listings in most of the country have also recovered. However, while sales activity rebounded to record-high levels, new listings only recovered to about their five-year average in most markets. The relative strength of demand for homes compared with supply has meant sales activity has been eroding active inventory, which was already scarce in many markets pre-pandemic. That said, this has been a trend since 2015.

The increase in demand has impacted every part of the country, including the Prairies and Newfoundland and Labrador. While these regions aren’t experiencing the same intensity of upward price pressures as the rest of the country, compared with previous years, demand is strengthening and prices have indeed started to increase.

Despite the historic setback to the spring market caused by the pandemic, CREA projects national sales to hit a record of 544,413 units in 2020, representing an 11.1% increase from 2019 levels. The strength of the Canadian housing market was broad-based, with every province except Alberta registering a year-over-year increase in sales. British Columbia and Quebec stand out as large contributors to the overall gain.

The national average price in 2020 is on track to rise by 13.1% on an annual basis to just over $568,000. This reflects the current balance of supply and demand, which heavily favours sellers in many local markets.

On a monthly basis, sales are forecast to ease back to more typical levels throughout 2021; however, presuming there’s a more normal spring market in 2021, the year as a whole is expected to see more home sales than 2020. National home sales are forecast to rise by 7.2% to around 584,000 units next year. All provinces except Ontario are forecast to see increased sales activity in 2021, as low interest rates and improving economic fundamentals allow people to get into the markets where homes are available for sale.

Ontario has seen strong demand for several years, particularly outside of Toronto, which has eroded active supply in the province. This shortage is expected to limit sales activity in 2021. The strength of demand, particularly for larger single-family properties, will drive the average price higher as potential buyers compete for the most desirable properties.

A Canadian home price tracker known to be one of the best measures of price appreciation just experienced a record-breaking November increase.

The Teranet-National Bank House Price Index rose 0.9 percent last month over October’s reading, the strongest gain for the month of November in the 22 years that the index has been compiled.

National Bank Senior Economist Marc Pinsonneault said it was the second month in a row that the index had broken a record for a monthly increase at the national level. Hamilton, Halifax, Montreal, Ottawa-Gatineau, Victoria and Vancouver all posted monthly increases of over one percent. Toronto missed the one percent mark, but still recorded a “highly respectable” 0.8 percent rise, according to the economist.

From an annual perspective, the national index rose nine percent over November 2019, the highest 12-month increase since early 2018. Ottawa-Gatineau, Halifax, Hamilton and Montreal led the way by this measure, all recording annual increases above or near 15 percent.

The Teranet-National Bank index is known to lag behind other widely used home price tracking tools, including the monthly average home sale prices published by the Canadian Real Estate Association (CREA) and local boards.

This is because the index is compiled using a repeat sales methodology that works by tracking the price change between the two most recent sales of the same property. The index uses prices entered into public land registries in the Canadian markets it tracks. These often are slower to respond to market changes because sale price data is not added to land registries as quickly as it’s entered into the MLS systems used by real estate boards.

“The strong rise of prices is consistent with the revival of home sales volume over the last several months reported by the Canadian Real Estate Association. For a third straight month, the number of sale pairs entering into the 11 metropolitan indexes was higher than a year earlier,” wrote Pinsonneault.

In new commentary on the Teranet-National Bank November price figures, Capital Economics’ Stephen Brown said Canadian home price inflation is forecast to rise above 10 percent annually in the first few months of 2021. It will slow following that, but is expected to continue to rise throughout the year.

“A few forecasters reiterated at the start of December that they still expect declines in house prices in 2021, seemingly because they believe the effects of high unemployment will finally be felt,” wrote Brown in commentary published this morning.

“It seems very hard to justify those downbeat views from the recent data, however, with the sales-to-new listing ratio little changed in November and still consistent with very strong house price inflation,” he continued.

The sales-to-new listing ratio is a key indicator of whether the market is in buyer’s or seller’s territory. With CREA’s latest national reading showing the ratio still in record high territory — meaning the market is undersupplied and sellers are calling the shots — continued price increases seem inevitable.

While home sales across the country declined slightly in November from the previous month, they were up a healthy 32 percent over the same time last year.

In other words, it’s the type of stellar performance that’s become standard during 2020’s post-spring lockdown period.

But the strong home sales figures published today by the Canadian Real Estate Association (CREA) represent more than just a continuation of the market’s remarkable performance in the second half of the year.

Canadian home sales are a hair’s breadth away from breaking an all-time record for transactions in a single year.

“Many Canadian housing markets continue to see historically strong levels of activity, so much so that a new annual sales record this year is looking more likely every day,” said CREA Chair Costa Poulopoulos, in a media release.

According to CREA, there have been 511,449 home sales between January and November this year. That’s up 10.5 percent from the same 11-month period in 2019 and already the second-highest January to November sales tally on record.

This year’s total is behind 2016, the current record-holder, by only 0.3 percent. So yes, you read that right, in this bizarre and anxiety-inducing year, Canada’s housing market may very well see its best-ever performance for home sales.

In fact, CREA’s Senior Economist Shaun Cathcart thinks it’s more likely than not to be a record-breaker.

“If I had to sum up the Canadian housing story in 2020, I would say it’s gone from weakness because of COVID to strength despite COVID,” said Cathcart. “It will be a photo finish, but it’s looking like 2020 will be a record year for home sales in Canada despite historically low supply.”

On the pricing side, CREA’s Home Price Index rose 11.6 percent over the previous year. Meantime, the national average home price was up nearly 14 percent to $603,000, though the association said that this is heavily influenced by the country’s most expensive markets, Toronto and Vancouver.

The propulsive price growth is linked to the record-low supply — measured in months of inventory — that Cathcart mentioned. CREA said there were 2.4 months of inventory at the national level by the end of last month, meaning it would take 2.4 months to sell all the homes listed on the market at the current rate of sales. In Ontario, supply is exceptionally tight, with 21 markets across the province posting less than one month of inventory at the end of November.

While downtown condos saw price declines last month, a few suburban condo markets in the Toronto region still recorded healthy price growth.

Oakville, Oshawa and Burlington all posted resale condo price gains above 10 percent in November, while Brampton and Vaughan recorded increases just shy of the double digits.

Condo sales activity was about on par with transaction levels recorded in November 2019 for the three top-performing suburban cities, but demand was strong enough to keep prices rising.

To compile this data, the Livabl team looked at average sale prices for condo apartments sold last month in the 30 cities and towns outside of the City of Toronto that TRREB tracks. Of the areas that recorded 10 or more transactions during both November 2020 and 2019, three experienced price increases over 10 percent compared to the previous year.

Oakville topped the list with its average condo price rising to $661,555, up nearly 16 percent from a year ago. Oshawa posted a nearly 15 percent gain, with an average sale price of $307,400 in November. Rounding out the top three was Burlington, with prices increasing to $554,494, an annual gain of 12 percent.

The two cities that came close to achieving double-digit gains — Brampton and Vaughan — each recorded increases of nearly nine percent, with prices rising to $462,461 and $646,801, respectively.

Of course, the pace of price growth in these suburban condo markets seems relatively sluggish compared to detached homes across the Toronto region. Detached home prices rose over 20 percent in 19 Toronto suburban cities and towns last month.

New townhomes recorded robust sales numbers in several markets across Canada this year, as consumers looked for affordable lower density options amid the pandemic.

Real estate data firm Altus Group published a report this month highlighting strong new townhome sales in Vancouver, where transactions doubled compared to last year’s levels, and the Toronto region, where new townhomes saw the biggest improvement in sales of any property type versus 2019.

Even in Alberta’s weak residential real estate markets, townhome sales were only down slightly in Calgary and Edmonton, the report said.

Altus Group looked at new townhome sales in the first three quarters of 2020 and compared year-to-date activity in the property segment to the past four years. In Vancouver, sales have already surpassed 2019 and 2018 totals just in the first nine months of the year. In Toronto, activity in the first three quarters has already exceeded sales in the previous three years — only 2016 saw better results.

In its report, the firm said that the surge seen in 2020 lines up with growing buyer interest in townhomes that’s been building for several years.

“With housing affordability challenges in the major markets increasingly pricing single-detached housing out of the reach of many buyers, townhouses provide a family sized option with many of the desirable features, such as garages, private front door and amenity spaces, at a much lower price point,” Altus Group said in the report.

It went on to note that new townhomes in suburban regions outside major cities are typically less expensive than two-bedroom condos in more central areas.

Looking ahead, buyer demand for townhomes is expected to keep growing. Altus Group predicted that pandemic-driven factors like low interest rates and flexible remote work arrangements allowing buyers to live farther from their employers would influence demand. The firm also noted that Millennials searching for affordable and family-friendly housing options would continue to support demand.

Average condo prices in the City of Toronto are up about 150%. But…

Land costs are up 160%.

Soft costs are up 118%.

Construction and related costs are up 91%.

Financing costs are up 93%.

Government fees, charges, and taxes are up 413%.

And development charges (a subset of the above) are up 3,244%!

At the same time, the profit margin over costs is down about 45%.

(As a point of comparison, CPI only increased by about 26.5% during this same time period.)

The point here is that condos are so expensive largely because of cost-plus pricing. Government fee increases are also outpacing every other cost bucket.

If you’re developing new housing in Toronto, you have no choice but to accept these rising costs. You have to pay development charges and you have to pay them when you’re told, even if that means swallowing some new massive increase.

So by necessity, end prices get continually pushed as a way to try and absorb these costs. You figure out what your costs are going to be and then you price accordingly. But of course, you also have to ask yourself: Can people actually afford this kind of pricing and can this neighborhood support it?

Sometimes the answer is yes, which is why development continues. But sometimes the answer is no. In this case, the next step is simple: you don’t build.

The Toronto housing market had a lot working against it this November.

The City of Toronto and neighbouring Peel region moved into the “lockdown” zone of the province’s tiered restriction framework, with non-essential businesses closed from November 23rd onward. Prior to that, both regions already were in the highly restrictive “red” zone.

On top of all this, despite the steady stream of strong data on the home sales and pricing front, many commentators appeared certain that the housing market would falter following the summer rebound, as high unemployment and lower incomes would eventually snuff out the momentum.

Instead, the market’s performance has been almost uniformly positive. RBC Senior Economist Robert Hogue was one of the commentators who wrote in the summer that the housing rebound would slow by the fall months, with home prices likely to begin declining later in the year. The remarkable home sales and pricing data from November led Hogue to quip “so much for the cooling” this fall in a research note published last week.

“The overall [housing] picture remained amazingly strong despite the re-imposition of tighter social distancing restrictions in the City of Toronto and Peel region in November,” Hogue wrote, noting that changing housing needs and low interest rates “kept the market boiling.”

The economist had previously written that downtown condos are currently the “weak spot” in Canada’s housing picture and that remained true for Toronto last month. Condo prices are now beginning to soften as listings have soared 194 percent, widening the chasm between supply and demand.

But it’s the strength of single-family home sales, especially in the suburban 905 areas of the region, that continue to keep the overall market boiling hot. Detached home sales in the 905 were up 33 percent over a year ago while active listings fell 40 percent.

“Very tight demand-supply conditions apply increasing heat on detached home prices across the entire GTA,” Hogue wrote.

In other words, it’s the complete opposite supply and demand dynamic playing out compared to the sluggish downtown condo market.

Looking ahead, Hogue believes condo prices will continue to decline in the near term while single-family home prices are expected to keep rising “briskly.”

The Toronto housing market is closing 2020 in a way that feels well-suited to the year: some highs, some lows, and not a whole lot of clarity on what’s to come.

According to the newest report from RBC, the entire country saw strength in its housing market throughout November, except for in one area — downtown condos in large urban areas.

It’s easy to imagine, then, that the City of Toronto’s data presents as a combination of “on fire” and “flailing.”

Despite the return to lockdown-status in Toronto and Peel region, the month saw GTA resales rise 24.3% year-over-year, with the MLS Home Price Index (HPI) up 10.6% during the same period.

The 416-region specifically is described as “both hot and lukewarm,” with sales of single-family homes up 24% year-over-year, while condos sales were “flat.”

But the real difference, RBC says, is inventories. Active detached-home listings are sitting some 13% below year-ago levels. Meanwhile, condo listings have skyrocketed 194%. As the report concludes, it’s “no wonder downtown Toronto condo prices are beginning to soften.”

Indeed, TRREB’s November market report, released Thursday, captured the small drop in the average condominium apartment selling price for the ‘416’ area code. Since the onset of the pandemic in March, April is the only other month to have seen a decline in year-over-year condo prices (-4.0%) in the 416 (though October only managed a gain of less than 1%).

At the same time, the month saw market conditions tightened in many single-family market segments, resulting in double-digit year-over-year increases in selling prices for detached houses, semi-detached houses, and townhouses.

The story of the city’s condo market is opposite to that of the detached home market; read: plentiful supply.

“The downturn in rental markets has prompted many condo investors to sell over the past several months,” reads RBC’s report — a statement that, through autumn, has become increasingly clear to those keeping an eye on the downtown real estate scene.

TRREB’s data from the Q3-2020 condominium market and rental market reports revealed the number of condo apartments listed for rent at some point during Q3-2020 was up a massive 113.9% year-over-year. The influx was reportedly a result of many investors and Airbnb owners turning to the longterm rental market in an effort to cover ongoing costs.

And, according to John Pasalis, President at Realosophy Realty, the condo market being in such a state means something to sleep on for would-be investors. As resale prices have been on the decline, albeit “only by a little bit,” rents have decreased by nearly 20% in some cases.

“Certainly, if you’re a savvy investor, you might find some value. There’s no rule necessarily, but it doesn’t seem right to be paying peak prices — 2020 prices — for rents that are at 2018 levels,” he said.

“If you want to be somewhat conservative, you’re either going to wait for further softening in prices — if you think that’s going to happen — or you at least wait for the rental market to start recovering a little bit, because if you’re buying now, as an investor, not only is your rent significantly lower, but your vacancy is higher. It might take you two to three months to rent out your unit.

It makes sense, then, that as those who are interested in investing have been cautioned to watch and wait, those who are already in the downtown condo game have been inclined to attempt to offload their properties. It’s hard to make anything back from a vacant space, after all.

While anyone looking to get in on the condo scene right now — whether renting or buying — has a (relative) pick of the lot, those more interested in single-family homes have increased competition, and prices, to deal with.

TRREB’s latest data showed that market conditions tightened in many single-family market segments in November, resulting in double-digit year-over-year increases in average selling prices for detached houses, semi-detached houses and townhouses.

“Homebuyers continued to take advantage of very low borrowing costs in November, especially those looking to buy some form of single-family home,” said Lisa Patel, TRREB President. “Competition between buyers for ground-oriented homes has been extremely strong in many neighbourhoods throughout the GTA, which has continued to support double-digit annual rates of price growth.”

To use a local metaphor, stabilization then (or a return to some form of normalcy), is like the CN Tower on one of Toronto’s smoggiest summer days — you know it’s there, but it’s difficult to see, and you can’t gauge exactly how far away from it you’re standing.

With regards to the condo experience, any rehabilitation depends on downtown’s healing, according to Pasalis.

“Rents are not going to recover until the downtown core recovers. [At that time,] people are going back to offices, there’s a reason to be living downtown because you walk to the office, the office is nearby, the restaurants are nearby. So, until there’s some return to a normal downtown lifestyle, downtown rents aren’t likely to recover anytime soon,” he said.

And until downtown regains its appeal, it’s hard to imagine what would slow the ever-growing interest in single-family homes, what with their increased space, privacy, and (location-dependent) bang for their buck.

With so many unknowns hanging in the air, conservative advice would be to make no sudden movements… at least not without giving those moves some serious thought. Because, while the timeline for recovery remains uncertain, one thing is clear: downtown is not dead, it’s resting. And come next summer — or even the summer after — you don’t want to be left reminiscing about the waterfront, the Queen West strip or Riverdale Farm as you grapple with suburban regrets.

TORONTO — HSBC says it will offer rates below one per cent for some mortgages, which rate comparison website RateSpy.com says is a record low for Canada.

The bank is advertising a 0.99 per cent rate on its website for new five-year variable closed term mortgages, with the annual percentage rate, or APR, based on a $200,000 mortgage.

The deal applies to high-ratio residential mortgages, which means the homebuyer has a down payment of less than 20 per cent of the purchase price.

Rates.ca and RateSpy editor Robert McLister says that’s an important point, because the low down payment means the homebuyer will also have to pay for default insurance.

The rate is also variable based on changes in HSBC’s prime rate, which now sits at 1.46 per cent, so the rate could rise over the next few years as the economy mends and the Bank of Canada raises the borrowing rate.

Mortgage rates are currently low, after the Bank of Canada dropped its overnight rate amid the COVID-19 economic downturn.

 

Canada’s pandemic-weary economy is poised to “take off like a rocket” in the latter part of 2021, according to CIBC World Markets deputy chief economist Benjamin Tal.

Delivering his much-anticipated annual economic update during the opening session of the virtual Real Estate Forum in Toronto, Tal had a message of hope for the more than 1,800 attendees. With a vaccine now on the horizon and two-thirds of Canada’s economy already chugging along in close to high gear, he said the country is poised for a strong recovery.

“Clearly we are seeing the light and this light is not a train, it is a real light,” he said, noting, however, that the next few months could still be quite difficult. “We have to go through the winter. The winter will be tough, we all know that.

“The second half of 2021 will be on fire, I believe. This is the time to position yourself to take advantage of this type of rally; economic activity we haven’t seen in a very very long time.

“Basically my point is short-term bad. Medium-term better.”

Tal built his argument on a combination of many factors.

Many factors point to strong recovery
In addition to the pending arrival of a vaccine, or vaccines, is the experience factor. Canadians have had eight months to learn how to live with the COVID-19 pandemic and that has allowed most of the economy to remain open so far during the second wave.

“We know how to deal with this environment more productively relative to March. Confidence, clearly, seeing the light means many of you will start taking (financial) risks, now compared to the summer of next year.”

He said while impacted areas of the economy such as retail, service and travel have been hit very hard, the damage is limited.

“The damage is very deep, but it’s also very narrow,” he noted. “Two-thirds of the economy is already in a full swing recovery.”

As well, because of the nature of the damage, when the pandemic is under control “it is much easier to open a new restaurant than it is to open a new manufacturing facility.”

Canadian government leads in spending
The Canadian government is also leading the world in its spending, compared to the GDP decline, to buoy the economy. While labour income is down about two per cent, government transfers have increased by 50 per cent, he said.

Tal estimated this and other factors have created a massive pool of money sitting in bank accounts waiting to be spent – about $90 billion in private households and $80 billion for businesses.

“Together, $170 billion,” he said. “Money that is there, and all those households are dying to spend this money . . . that is the biggest stimulus you can get.

“This economy will take off like a rocket in the second half of 2021. We have so much pent-up demand and we have the ability to finance it vis-a-vis excess cash that is sitting and doing nothing.”

Canada must be “player” in U.S. recovery
Tal also noted the results of the U.S. election will factor into Canada’s recovery.

He said Canada must position itself to share in the benefits of a massive stimulus expected to be injected into infrastructure projects by the incoming Democrats, which will be a key to its own economic recovery.

“(Incoming president Joe) Biden is talking about buy America. We have to convince him actually to buy North America.”

Although he said the Keystone pipeline could be in jeopardy, Biden is expected to take a harder line on fracking, which could mitigate any potential impacts to Alberta’s oil patch.

Biden is also likely to create a more united front to battle China on trade issues — a front likely to include Canada and Europe – rather than a solo battle. Tal said Canada is going to be forced to choose a side in what he calls a trade Cold War.

“When you are in a Cold War, you have to choose a side. We know where we are,” he said, noting the Liberal government’s attempts to foster more trade with China and other countries have either fallen flat or had limited success. “Our reliance on the U.S. will rise.”

One drawback of having the Democrats in power, however, is that the U.S. will once again open its borders (once the pandemic is under control) to immigration. That means Canada will need to compete for the brightest and best, he said.

Tal believes office sector will be fine
In terms of direct real estate and commercial real estate impacts, Tal said he expects a new normal that doesn’t look radically different from pre-pandemic days.

“I believe (the pandemic is) a condition,” he explained. “I believe 2008 was a condition, I believe 9/11 was a condition, but we adjusted to make it feel like an event.

“I believe we will be back in the office. Clearly we will be working more from home, and if it’s -20 outside and snowing maybe that day I will be working from home. But (what do) I think (of) the predictions that office space is dead? Wrong. Simply wrong. We will be back in the office.”

He said good retail will also survive and prosper, noting that as soon as lockdowns ended, people were eager to return to stores, restaurants and other such venues despite a host of pandemic-related restrictions and concerns.

Yes, e-commerce will grow, but he expects bricks-and-mortar retail to retain an important role.

“People said over the first six months of the crisis, (e-commerce) gained 10 years in market share, which is true. But in the last five months we lost five years. It is exaggerated.

“Quality will be the dividing line. High-quality, good experience will benefit and do extremely well.”

Observing these trends has led him to conclude that while much is changing, much will remain the same.

“Clearly the economy is being transformed but when the fog clears, everything will look very, very familiar,” he predicted.

“Governments are all trying to support the economy. We are all buying time. This crisis has an end game, this end game is a vaccine. It’s coming and between now and then, we are all buying time.”

The new condo market’s performance in October was slightly more reminiscent of spring 2020 than a typical busy fall season, as sales sank 32 percent from the previous year.

The new Toronto region data, published today by the Building Industry and Land Development Association (BILD), arrived as several GTA regions, including the city itself, entered their first week of a lockdown that’s sure to further impact home sales.

While October’s sales decline was nowhere near as dramatic as April’s 80 percent collapse, it was emblematic of the new condo market’s struggles in the face of heightened restrictions, a sluggish condo resale market and investor uncertainty.

But just like the spring season, new condo prices remained robust, with the benchmark price hitting $990,880, a nearly 19 percent increase from a year ago.

Altus Group, BILD’s data provider, noted that there were a large number of new condo launches in October, but acknowledged sales volume was lower than past fall seasons, which is usually the busiest time of the year outside of the spring months.

Altus Group’s Ryan Wyse pointed to new pandemic-induced procedures around new home sales that have led to challenges around condo launches and the pace of sales that’s possible with the new restrictions in place.

“Virtual tours and signings and by-appointment sales offices have allowed the market to continue operating during the pandemic. However, sales launches have changed — instead of crowds at opening, we are seeing a shift to appointments over a longer period of time,” said Wyse.

The major bright spot in the BILD and Altus Group October data was new single-family home sales, which saw sales jump 44 percent and prices rise 12.7 percent to $1,211,141.

Much like the resale market, new single-family home sales have outperformed their new condo counterparts during the recovery period that followed the spring shutdown. While single-family sales activity in October did not match the triple-digit increases seen in August and September, this cooling likely reflects pent-up demand from the spring running its course and giving way to conditions that are more typical of a busy market.

There’s an element of seasonality as well, with this past August in particular being unusually busy for new home sales. October 2019 was already a relatively busy month, so the increases seen last month were less likely to be as pronounced when compared to gains seen in the typically quieter late summer period.

BILD President David Wilkes took a broader view of the state of the new home market, noting that sales in 2020 so far are higher than the same January to October period in 2019.

“When we look at the overall numbers so far in this very unusual year, it’s clear that the demand for the homes our industry builds is not going anywhere,” said Wilkes.

“In spite of the challenges brought on by the pandemic, year-to-date new home sales in the GTA are up 11 per cent compared to the same period last year and two per cent above the 10-year average, demonstrating not only the resilience of the housing market in the GTA, but also the role that our sector will play in economic recovery.”

Against a tumultuous backdrop, the Canadian housing market put on a remarkable display of resilience in 2020.

Now, as we enter the final stretch of this bizarre and challenging year, one of the country’s largest brokerages is forecasting more healthy home price growth and strong buyer demand for 2021.

RE/MAX Canada published its Housing Market Outlook Report on Tuesday, addressing a wide range of real estate topics, from the pandemic-driven suburban home buying surge to the much-better-than-expected performance of the country’s housing market despite 2020’s abundant economic turmoil.

RE/MAX brokers and agents surveyed for the report said a lack of housing supply hitting the market will continue, leading to challenges for homebuyers and putting more upward pressure on property prices.

This upward pressure is expected to result in national home price gains in the four to six percent range for 2021, driven by “move-over” buyers who are relocating from their cities and provinces and “move-up” buyers looking for more space.

“We’ve seen a lot of anecdotal evidence since the summer that households are considering significant lifestyle changes by relocating to less-dense cities and neighbourhoods,” said Christopher Alexander, Executive Vice President at RE/MAX Canada.

“This has sparked unprecedented sales this year in suburban and rural parts of Canada and we expect this trend to continue in 2021,” he added.

There was certainly no shortage of pessimistic takes on the country’s housing market in the early days of the pandemic. With housing markets frozen due to lockdowns and subsequent restrictions, it was difficult to be optimistic as sales plummeted through the spring and job losses piled up.

Yet, according to a survey of Canadians commissioned by RE/MAX for the report, the pandemic directly influenced only six percent of Canadians to sell their homes this year. It’s a far cry from the anticipated market upheaval caused by large numbers of homeowners who, unable to make mortgage payments, would be forced to sell, leading to a tsunami of listings hitting all at once and driving property prices down.

Instead, the survey found that 40 percent of Canadian homeowners realized their current home needed renovations during the pandemic while 29 percent said they decided they needed more space.

As for the outlook for 2021, 52 percent of Canadians were confident that the housing market would “remain steady” and still viewed real estate as a strong investment option.

Back in March and April, there was a belief that big and dense cities were going to pose a serious problem in the fight against COVID-19.

The narrative was that the benefits of urban density suddenly flip to glaring negatives during a pandemic. Elevators are a problem. Public transit is a problem. Busy streets and public spaces are a problem. Instead of density, you want dispersion. There was also some speculation that COVID-19 cases would be somewhat correlated with colder climates.

The data that we are seeing today suggests the opposite. Note the above chart by Axios. On a per capita basis, COVID-19 cases are now the lowest — and below the national average — in large US cities with populations greater than 1 million people. Where cases are the highest, again on a per capita basis, is in rural areas. Non-metro areas less than 10,000 people. The county with the highest rate also isn’t the coldest of places. It’s Childress County, Texas, where the rate is about 1,265.3 cases per 100,000 people.

I have a lot of questions about the most important factors affecting transmission rates. Is mask wearing, for example, more important than average temperatures? What is the impact of socio-economic status? I am seeing maps that, unfortunately, suggest this plays a meaningful role. What is really driving these so-called “hot spots?” But what seems clear to me is that density is not necessarily destiny during this pandemic.

Chart: Axios

A surge in Canadians’ disposable incomes and a decline in their spending habits has resulted in approximately $170 billion of surplus of cash, $90 billion of which is tied up in households, according to a CIBC report.

The COVID-19 pandemic was the impetus for reduced consumer spending, but with the addition of the government’s pandemic emergency programs, which bolstered incomes, the amount of money Canadians saved skyrocketed. The report noted that the excess cash—the other $80 billion is held by businesses—which is about 4% of consumer spending, is a record.

“That spike in disposable incomes coincided with a notable decline in spending, which resulted in the savings rate surging from 3.6% to 28.2% as of June,” read the report. “Since then, government support has become increasingly more tailored to those who need it the most, while the re-openings have seen a nascent recovery in consumer spending. Using US data for the third quarter as a guidepost, the Canadian savings rate likely fell to 13% in Q3—still miles above the 3.6% level seen prior to the pandemic. With the second wave of infection upon us, that rate is likely to remain elevated during the winter.”

The report’s findings are all the more bizarre considering the economy is still reeling from pandemic-induced business shutdowns this past spring, and yet Canadians have never been more flush. But upon closer examination, low-income households accounted for the overwhelming majority of job losses in Canada, and their consumption habits didn’t much diminish as they continued buying essentials. However, the majority of the surplus money belongs to mid- and high-income households, which curtailed their non-essential outlays.

“We do not have current data on spending by level of income for Canadians, but utilizing high-frequency US data, we learn that spending amongst high-income households is currently 10% below its January level—notably weaker than the 3% drop seen amongst low-income households,” said the report. “With the happy days of summer over, it is reasonable to assume that mid- and high-income households will, in fact, reduce consumption of nonessentials again.”

The report also predicted that consumption growth will decelerate while incomes will stay elevated because of both the Canada Recovery Benefit program and Employment Insurance, which will cost $17.9 billion and $13.5 billion, respectively, through the next two years, and because of new job creation.

Strangely the Greater Toronto Real Estate Market has been spotty but active and there are options and opportunities as there are in any market.

The number of listings has increased and we have had a flip-flop as the 905 activity surges over that in 416.

“The trend here is that the pandemic has made the age-old desire to live in close proximity to the Central Business District quite irrelevant (for the time being.)”

Though we’re no longer set to be the home of one of the most technologically advanced neighbourhoods in the world, Toronto is still proving itself to be a huge force in the tech sector, and a hot spot for those in the industry.

The city’s scene has now surpassed that of even San Francisco as far as growth, and is still expanding rapidly despite the pandemic, as indicated by new numbers on our tech worker pool.

According to new rankings from CBRE, which scores U.S. and Canadian cities on their tech talent, Toronto tops the list in Canada for 2020 with a ranking of 87.6, adding a staggering 36.5 per cent more workers in that industry betweeen 2014 and 2019, making for about 250,000 innovative minds — 8.8 per cent of the city’s total workforce.

Even compared to major U.S. hubs, Toronto gained a significant edge as far as new graduates in the field, far outpacing all other Canadian cities with a ranking of 64.34 and coming fourth overall as far as tech talent between the two countries, just after the San Fran Bay Area, Washington and Seattle.

 

With billions being invested into new startups in the city each year, it’s no surprise that people in the biz are flocking here, especially as tech companies are far less affected by the health crisis than other types of businesses.

Some — like Shopify, which has a burgeoning Toronto presence — have even benefitted from the uptick in things like online shopping and social media use.

“Through COVID-19, tech companies have generally fared well. Early on, ecommerce and social platforms experienced a boom as shelter-in-place measures went into effect, forcing everyone to rely on the tech around them to work and live,” the new report reads.

“Success also extended to more specialized players in the realms of cybersecurity, IT infrastructure, gaming, and work-from-home enablers.”

As people continue to work from home and rely on online options amid lockdowns, it’s safe to assume that Toronto’s tech sector will keep on flourishing as the city remains one of the top contenders in the industry.

The biggest risk to Canada’s housing market in the near-term is new lockdowns in big cities that have seen COVID-19 infections surge in recent weeks.

According to an economist with Capital Economics, restrictions that may be rolled out in the coming days would put a dent in the robust sales activity recorded since summer, but would leave home prices mostly unaffected.

“The key near-term risk to the housing market is the prospect of “circuit-breaker” lockdowns in the major cities,” wrote Stephen Brown in a research note published today.

“New restrictions for Toronto [are] due to be announced later on Friday and, while the rumours so far suggest these will remain targeted to certain high-risk activities, we would not be surprised if this is the last step before all non-essential businesses are closed,” he added.

So far, Canada’s housing market has “shrugged off” worsening COVID-19 outbreaks. Brown said that a small monthly decline in home sales recorded in October could be tied back to lower inventory of homes for sale rather than pandemic fears. At the national level, the supply of unsold homes dropped to a record low of two and a half months, meaning it would take two and a half months for all homes currently listed on the market to sell at the current rate of sales.

With new restrictions aligning with the late year period and holiday season, when home sales typically slow down anyway, Brown writes that these measures “wouldn’t do much” to home prices.

The economist acknowledged that downtown condos are a weak spot for the market, but from a national perspective, they are too small to significantly shift home prices at the country-wide level.

Far more important to Brown is the potential impact of an effective vaccine on the housing market in 2021. Pfizer and Moderna have both reported the efficacy of their vaccines is at or near 95 percent. With Canada having already ordered substantial amounts of both, Brown asks if the distribution of those vaccines could reverse the rising home price trends we’ve seen this year.

It may seem like an unusual question considering the promise of a return to normalcy that the widespread distribution of these vaccines hold. But Brown writes that the pandemic was “an unexpected boon for the housing market” and COVID-19-driven policy moves by Canada’s central bank have caused mortgage rates to drop to rock bottom levels.

If mortgage rates were to begin to rise again on the back of an improving economic picture as the pandemic recedes, this could dissuade some potential buyers from entering the market.

A widely watched Canadian home price index just posted its highest gain seen for the month of October in 22 years.

The Teranet-National Bank Home Price Index rose 1.3 percent last month over September and 8.1 percent from the previous year. Ottawa-Gatineau, Hamilton and Montreal were the local markets that saw both the strongest monthly and annual price gains.

Victoria, Vancouver and Halifax also saw price increases healthily above one percent in October. Meantime, Toronto, Quebec City, Edmonton and Winnipeg all saw increases at one percent or lower.

The Teranet-National Bank index is known to lag behind other widely used home price tracking tools, including the monthly average home sale prices published by the Canadian Real Estate Association and local boards.

This is because the index is compiled using a repeat sales methodology that works by tracking the price change between the two most recent sales of the same property. The index uses prices entered into public land registries in the Canadian markets it tracks. These often are slower to respond to market changes because sale price data is not added to land registries as quickly as it’s entered into the MLS systems used by real estate boards.

National Bank Senior Economist Marc Pinsonneault said that a surge in the number of sales entered into the index was a sign the Canadian housing market is continuing to firm up after the pandemic caused the market to stall through the spring.

Because of the lagging nature of the index, the worst of the pandemic’s market impact was more clearly captured in the summer, rather than in the spring data.

Pinsonneault noted that sales entered into the index in October were up 48 percent over the same time last year.

“This development echoes the revival of home sales reported by the Canadian Real Estate Association beginning in July, recovering ground lost in the severe slowdowns induced by COVID-19 in previous months,” he said.

Toronto is a city of soon-to-be skyscrapers. According to the 2020 North American Crane Index, we have the highest number of active tower cranes out of every other city in the continent, with 120 in the downtown core alone. And in a matter of years, those cranes will be replaced by some of the tallest condos in the country.

Here are some new skyscrapers about to transform the Toronto skyline.

SkyTower, 95 storeys
Hariri Pontarini’s monster condo (pictured above) is slated for completion in 2024. It’s one of three towers making up the Pinnacle project at One Yonge, and will be the tallest building in Toronto, after the CN Tower. If you’ve got a budget as lofty as this development, you’ll be able to afford one of their $800,000 units.

Mirvish+Gehry, 91 and 81 storeys
The Princess of Wales Theatre will soon get two garganguan companions, courtesy of two new mixed-use, high-ceilinged towers in the Entertainment District. Billowy “canopies” will protrude out of these tower podiums and over Duncan Street.

1200 Bay Street , 87 storeys
Swiss-based architectural firm Herzog & de Meuron and Canadian group Quadrangle have been appointed by developers Kroonenberg Groep and ProWinko to transform the corner of Bay and Bloor into this mix-used tower with floor-to-ceiling operable windows and a sky lounge.

The One, 85 storeys
If you’ve passed by Bloor and Yonge lately, you’ve undoubtedly caught sight of the scifi-looking construction site of Mizrahi Developments’ The One. Construction was delayed for several months but above-ground work has finally resumed. It will be Canada’s first supertall skyscraper when it’s done in 2022.

YSL Residences, 85 storeys
The southeast corner of Yonge and Gerrard has seen massive changes over the years, in large part to make way for two towers, dubbed Yonge Street Living (YSL). Both skyscrapers will be connected by a sky-bridge.

372 Yonge, 74 storeys
The Aura Tower is still the tallest residential building in Canada right now at 79 storeys, but only slightly shorter will be this new project from Dialog, which will sit directly across the street. It will also hold a new venue called Club Bluenote, named after the iconic rhythm and blues club which used to exist on the property in the 1960s.

50 Bloor Street West, 70 storeys
Rising up from Yorkville’s Holt Renfrew will be this condo with office space and retail on the bottoms floors. There will be 600 residential units included in the build. A trio of KingSett towers ranging from 50 to 69 storeys located around the corner are also on the way.

200 Queens Quay West, 71 and 41 storeys
The waterfront will soon be even less visible from uptown thanks to this pair of towers from Lifetime Developments. Originally slated to be affordable housing, this parking lot will instead be a mix of condos with some affordable housing sprinkled in.

Concord Canada House, 69 and 59 storeys
Concord Adex’s headquarters will soon be replaced by this mixed-used condo project. Both towers will jut out of a 10-storey podium and contain more than 1,300 new condo units.

A 25-acre expanse of properties located between St. Clair Avenue East, Kennedy Road and the Scarborough GO Train station could make way for a master-planned community.

In late October, an Official Plan Amendment (OPA), draft plan of subdivision and rezoning application was submitted to city planners to construct a mixed-use community with 6,619 residential units at 3585 Saint Clair Avenue East. The site would span multiple lots, and incorporate new retail, park and residential uses. The architect, Giannone Petricone Associates, is also behind other master-planned projects in the Greater Toronto Area, including 250 The East Mall Condos and Agincourt Mall Redevelopment.

The development lands are located on the south side of St. Clair Avenue East within an area known as the Scarborough Junction Triangle, according to the planning rationale by Bousfields Inc. Consisting of 12 industrial and commercial-type properties, the site is split into two parcels, bordered by Kennedy Road to the west, St. Clair Avenue East to the north and the Metrolinx GO Transit rail corridor to the southeast.

This is not the first time that development applications have been proposed for this area. In 1998, an OPA was filed for a mixed-residential and commercial project on an 19.7-acre portion of the site. Rezoning applications were later filed and then appealed in 2006. The application went through revisions from 2006 to 2012, and a Settlement Approval was granted in April 2019, explains the planning rationale.

The Scarborough Junction Master Plan seeks to create three large sites within the triangle that contain new streets, buildings and park space. The recent development application focuses on Site A, with Sites B and C used as a reference but not formally included in the application.

Redeveloping the subject Site A would create a 201,715-square-foot public park with 10 development blocks containing buildings ranging from 12 to 48 storeys in height.

 

Seventeen high-rise buildings with mid-rise base structures are proposed for Site A. Of the 6,619 proposed residential suites, the breakdown consists of 379 studio, 4,509 one-bedroom, 1,058 two-bedroom and 673 three-bedroom units. According to the project’s data sheet, the residential units would include both condominium and rental uses.

Approximately 317,621 square feet of total residential amenity space would be provided for indoor and outdoor use. A total of 3,666 parking spaces are proposed for Site A, located in a series of underground garages. The application also includes 7,336 bicycle parking spaces for long- and short-term use.

In the southern part of Site A in Block J, a 201,715-square-foot public park would be constructed adjacent to the railway corridor as a central focal point of the master-planned community. Landscaped pathways, event spaces, sport courts, lawn space and a children’s playground with play structures are being considered for the park area.

Landscaping features, seating areas and patio spaces are also proposed in various sections of Site A, such as the 7,588-square-foot Station Plaza and 36,769-square-foot Retail Square. According to architectural drawings, space for a grocery store, daycare, retail and community rooms are proposed.

In the neighbourhood, Merge Condos continues sales while registration is underway at Nahid on Kennedy.

The federal government intends to settle 1.2 million new immigrants over the next three years in a bid to catalyze economic recovery, and if there’s one sector of the economy that will benefit, it’s real estate.

The COVID-19 pandemic has stifled Immigration, Refugees and Citizenship Canada’s (IRCC) ability to accept and process applications, resulting in a shortfall that’s left segments of Toronto’s once-searing condo market reeling. However, with 60% of these new immigrants touted as belonging to the “economic class,” which includes skilled workers, investors and entrepreneurs, the country’s largest condo market should see an immediate surge in activity.

“To compensate for the shortfall and ensure Canada has the workers it needs to fill crucial labour market gaps and remain competitive on the world stage, the 2021 to 2023 levels plan aims to continue welcoming immigrants at a rate of about 1% of the population of Canada, including 401,000 permanent residents in 2021, 411,000 in 2022 and 421,000 in 2023,” said an IRCC statement. “The previous plan set targets of 351,000 in 2021 and 361,000 in 2022.”

A third of Canadian business owners are immigrants, the statement added.

Davelle Morrison, a broker with Bosley Real Estate, noted that activity in Toronto’s rental market has been hampered by the dearth of newcomers to the city, although she says domestic investors have done their part to buoy the condo market.

“The real estate condo rental market is down quite a bit, as is the resale condo market, and I’d attribute those things to there being no immigration and no travel, which has affected Airbnb and other short-term rental operators. The lack of travel has depressed the rental and resale condo markets,” said Morrison.

“The other thing that’s interesting is, despite not having immigration, a lot of preconstruction condo projects in downtown Toronto have still sold incredibly well, even though they’re only appealing to domestic investors and not foreign investors. They have still fared quite well, even without immigrants.”

Canada welcomed 321,120 new immigrants to the country in 2019—a 116-year high that’s slated to be broken in 2021. Investors capable of carrying condos a little longer will doubtless benefit from the marked rise in demand that should cause market rents to surge.

“If the government’s plan is to allow more immigrants into the country over the next few years, then I’d say that’s great for both the condo rental and resale markets,” said Morrison.

Real estate investors are increasingly trying to get out of closing on their newly built condos in the Toronto region, as rents plummet and banks toughen borrowing qualifications for rental properties.

Selling the right to buy the new condo, also known as assignment sales, has soared during the past few months of the coronavirus pandemic, according to realtors.

It is a sign of weakness in the condo market beset by a glut of new units, declining rents and a dwindling number of renters.

“We are seeing a massive wave of assignments of people who don’t want to close in this market,” said Simeon Papailias, senior partner with REC Canada, which brokers hundreds of preconstruction sales every year.

Since the pandemic started early this year, the rental vacancy rate in the Greater Toronto Area has reached its highest level in more than a decade and the average rental price is 9-per-cent lower than the previous year, according to industry research group Urbanation Inc.

Demand for rentals has declined, with border restrictions slowing immigration, tourism and the influx of foreign students. At the same time, the number of available rental units has spiked. A record 23,000 new condos units will be completed in the Toronto region this year, and another 22,434 are due next year, according to Urbanation. It estimates that 50 per cent were bought as rental units.

Condo resales and their average selling price have increased over the previous year. As well, preconstruction sales on condo projects are still robust. But the number of new condo listings and new rental-unit listings are rapidly increasing. If that persists, realtors predict selling prices will start to decline.

As well, many Airbnb operators turned their properties into long-term rentals or are trying to sell them because tourism disappeared. In addition, many condo tenants gave up their places when they lost work or because they found space outside of the city.

Now, real estate investors who are due to close on their new condos worry that they won’t be able to cover their mortgage payments with rent.

“Guys who are closing in the short term are absolutely shook and affected by the pandemic and what it has done to the rental market. That is what is pushing them to assign,” said Mr. Papailias, who estimates that assignments now account for between 20 per cent and 25 per cent of his preconstruction sales. This compared with a range of 10 per cent to 15 per cent before the pandemic.

Unlike condo resales, which is tracked by local boards, there is no database for condo assignments and realtors are typically not allowed to list them. Over all, assignments account for a small fraction of the residential property market.

Assignment sales are only allowed when the condo building is almost completed, and the sale must be approved by the condo developer. The original buyer would have made a down payment for the purchase and sales agreement on the preconstruction condo before it was built about three or four years ago. For condos due to close this year, the original purchase was made around 2016 or 2017, when the economy was strong and demand for downtown city living was high.

With COVID-19 cases rising and some pandemic restrictions back in place, people are losing income and the economic recovery is uncertain. Banks don’t want investors defaulting on their mortgage payments and are trying to ensure that investors have cash and employment income to draw upon if a tenant stops paying rent. Since the pandemic began, lenders have become stricter with their qualifications, including in some cases requiring bigger down payments and not accepting down payments that were borrowed.

“The financing has gotten a lot more difficult,” said Matt Elkind, senior broker with Connect Realty, an expert in preconstruction sales. “The banks’ appetite to lend to investors is down significantly. An individual, six months ago, would have qualified without problem. They’re not now,” he said.

Mr. Elkind said one of his clients did not qualify for a bank mortgage because she received federal aid when her business lost revenue from the pandemic. Some banks are asking prospective borrowers for a 35-per-cent down payment to qualify for the mortgage, whereas in the past, 20 per cent would suffice.

Lenders are also recognizing less of the rental income as part of the borrower’s total income. For example, before the pandemic, a lender would count 80 per cent of the prospective rental income as part of the borrower’s total income. Now, the same lender will only recognize 50 per cent of that income, according to real estate experts.

“For people whose only income is rental, it is hard to qualify,” said Bernadette Laxamana, mortgage broker and president of Karista Mortgage in B.C.

Banks typically have the cheapest mortgages, with interest rates at record lows. (The popular five-year fixed rate is below 2 per cent.) If buyers don’t qualify at a bank, they are forced to seek alternative lenders, which typically charge higher interest rates.

“They are having to look at options where the money is much more expensive. That is where people are having problems,” Mr. Elkind said.

Because the prices of condos have increased since 2016, investors are able to sell their contracts at a higher price, according to realtors, though they said it was not an ideal time to sell, especially as housing demand is expected to soar with Ottawa boosting immigration targets for the next three years.

“Life changes, your situation changes and you have the option to sell. Is this the best time to sell it? No it is not,” said Hunny Gawri, managing partner of My Investment Brokers, which works on all types of preconstruction projects.

The Liberal government plans to bring in more than 1.2 million immigrants over the next three years, despite hurdles created by the global pandemic.

Immigration Minister Marco Mendicino unveiled what he called an “ambitious” three-year immigration plan today that set targets for bringing skilled workers, family members and refugees into Canada.

Canada aims to bring 401,000 new permanent residents in 2021, 411,000 in 2022 and 421,000 in 2023.

The numbers — which represent an increase of about 50,000 for each year — aim to compensate for the shortfall this year due to the pandemic and represent about one per cent of Canada’s population.

Last year’s plan promised to bring in more than one million immigrants over a three-year period, but the COVID-19 crisis and the resulting travel restrictions have slowed down the process. Mendicino said the government remains committed to welcoming newcomers as a means to keep Canada’s economy afloat.

At a news conference in Ottawa today, Mendicino said immigrants drive the population and economic growth that pays for vital programs such as health care.

“Put simply, we need more workers, and immigration is the way to get there,” he said.

WATCH: Immigration Minister Marco Mendicino on immigration targets:

 

Mendicino said he’s confident the government can meet the targets despite the global health crisis, by working around travel restrictions while adhering to safety measures such as mandatory quarantines.

He said the government will aim to attract workers to fill labour gaps in regions facing sector shortages.

“With nearly 60 per cent of all new admissions in the economic class, our plan will continue to focus on Canada’s economic growth,” he said.

The breakdown of next year’s plan includes:

  • 232,000 immigrants in the economic class.
  • 103,500 in the family class.
  • 59,500 refugees and protected persons.
  • 5,500 on humanitarian and compassionate grounds.

Traditionally, Ottawa’s goal in immigration policy has been to attract top talent in a competitive global market while reuniting families and offering refuge to people displaced by disaster, conflict and persecution.

In its last three-year plan, the federal government sought to bring in 341,000 immigrants this year, 351,000 next year and another 361,000 in 2022.

The government did not offer a precise figure on how many immigrants have arrived in Canada so far this year, but says it’s on track to meet half of its 341,000 target by year’s end.

Conservative immigration critic Raquel Dancho called the numbers “pure fantasy” and said the government has no plan to bring in large numbers of immigrants safely despite border restrictions and embassy and office closures around the world.

“There’s just no way that’s going to happen. And I was really hoping to hear an actual plan of how those issues were going to be resolved today. And there was not barely any mention of it at all,” she said.

She said rapid testing for COVID-19 would be a critical step in helping bring people in during the pandemic, but the government has failed to make the necessary progress.

She said the Trudeau government must offer a concrete plan for bringing people safely into the country during a pandemic and for integrating them into Canadian society.

“The number can be whatever it’s going to be, but unless they bring forward a plan for how they’re going to change course and get better at processing immigration applications, it’s really all for nothing.”

NDP MP Jenny Kwan said the government must take steps to accelerate processing after the pandemic slowed the process and created a growing backlog of applications.

“With over half a year of applications whose processing came to a complete stop, there will be no shortage of requests to be processed next year,” she said, adding that the immigration department must have a significant boost in resources to deal with the backlog.

“Without these investments, applicants are to expect significant increases in processing times for years to come, which were already long before the pandemic.”

She said Canada also should give permanent residence status to people who want it and are already in the country, such as temporary foreign workers and international students with job offers.

“Canada can, in fact, take a true humanitarian approach by regularizing all those immigrants and refugees and undocumented people,” she said.

Focus on labour gaps, says C of C
Leah Nord, senior director of workforce strategies and inclusive growth for the Canadian Chamber of Commerce, said the government must focus squarely on matching economic migrants to worker shortages in various sectors and regions of the country.

Despite changes in the labour market and a major spike in the unemployment rate since the onset of the pandemic, gaps in the market remain, Nord said — and immigration will continue to play a large role in filling persistent labour shortages.

“We’re in this rather strange situation where we do have higher unemployment rates than we’ve seen for a number of years. Before the crisis there were record low unemployment rates. Now, they’re tipping towards the other end,” she said.

“But we still have a situation where there are still job vacancies and jobs that need to be filled across the country. Immigration can play an important role in diversity and economic growth, but also in filling labour market gaps, for sure.”

The government’s Advisory Council on Economic Growth recommended that Canada boost its annual immigration levels to 450,000 by 2021 to stimulate the economy and tackle the twin labour market problems of an aging population and a low birth rate.

From Oakville and Milton in Halton Region to Oshawa and Clarington in Durham Region, there were 14 Toronto suburban cities and towns that saw detached home prices rise over 20 percent in October.

For the fourth consecutive month, the Toronto region’s housing market broke a sales record, again surging past 10,000 transactions for a 25 percent sales increase in October compared to the same month last year.

The Toronto Regional Real Estate Board (TRREB), which published the data yesterday, noted that sales in the detached home market segment drove the biggest gains, with new listings unable to keep pace with demand.

As buyer preferences have shifted to suburban detached homes, prices have been rising rapidly as suburban markets tighten up in the face of the demand influx. In just one example of how markets have quickly changed, detached home prices rose by more than 20 percent in 10 Toronto suburbs in September. Now, in October, there are 14 suburbs that saw home price growth surpass the 20 percent-mark.

Of the 30 suburban cities and towns tracked by TRREB, Adjala-Tosorontio in Simcoe County and Uxbridge in Durham Region saw by far the largest increases in detached home prices in October. Prices in Adjala-Tosorontio rose nearly 60 percent to $1,039,993 while Uxbridge recorded a close to 52 percent increase to $1,249,676.

Six more areas saw detached home prices rise over 25 percent. They were Scugog, Caledon, Clarington, Halton Hills, New Tecumseth and East Gwillimbury.

Rounding out the 14, another six markets saw prices rise between 20 percent and 25 percent. They were Oakville, Oshawa, Vaughan, Newmarket, Milton and Pickering.

Ten of those 14 markets recorded average sold prices above $1 million. In October 2019, only three of those same markets had average sold prices over the million dollar mark.

TRREB Chief Market Analyst Jason Mercer said earlier this week that the board expects near-record home sales figures for the remainder of 2020 with pent-up demand from the spring still buoying market activity. With buyers still scooping up detached homes at a rapid pace, expect prices to keep accelerating too.

Construction crews were busy completing work on 6,816 condo units across the Toronto region this summer.

The third quarter total represented a huge leap over last year, rising 124 percent above the 3,038 units completed in 2019’s third quarter, according to new data from research firm Urbanation.

The surge in condo completions over the summer pushed the total completed through the first nine months of this year to 17,596 units, 47 percent higher than through the same period in 2019.

What’s most impressive, according to Urbanation, is despite this substantial rise in completions, there are still 78,156 units under construction in the Toronto region. The firm said that it expects 5,411 units to be completed in the final quarter of the year, bringing the annual total to a record-breaking 23,007 units.

A similar completion total is expected for 2021, with 70 percent of completed units located in Toronto-proper.

The city’s pipeline of new construction condos has been burgeoning for several consecutive quarters now, but the record-breaking completion numbers are somewhat ill-timed from a demand perspective.

Condo resale listings have risen considerably through the summer and fall while the city’s rental market is also seeing a sharp increase in units listed, forcing investor-owners to slash prices in order to woo renters.

In the same report, Urbanation said that new condo sales remained strong in the third quarter, but sales levels diverged when the suburban 905 area surrounding the city and the Toronto-proper 416 area were compared. New condo sales rose 106 percent in the 905 in the third quarter, while the 416 saw sales decline by 16 percent.

Among the seismic shifts the pandemic has spurred across the Canadian economy, few are as profound as those that have rocked Canadian real estate. The battle to control the spread of COVID-19 has not only altered how and where Canadians work, but also led many to question where and how they want to live. Rural and suburban areas that once lagged desirable city addresses are now roaring hot as homebuyers wearied by lockdowns seek bigger yards and larger living spaces. Tight downtown condo markets that previously commanded expensive rents are now thick with supply. And the flow of immigrants that typically fuel demand for housing of all types has slowed to a trickle. In just months, the landscape of Canadian real estate has been shaken to its core. Whether the changes are permanent or transitory is an open question, but one thing is certain, 2020 has been a year like no other for Canadian housing markets. Here we look at seven ways COVID-19 has affected housing.

Peak home resale activity shifted from spring to summer

Lockdown orders sent a shock through the housing market in March, suspending open houses and flat-lining sales during what is typically a high season for the market. Spring activity wasn’t lost though. As social distancing restrictions were relaxed in the summer, the market sprang back to life. This led to record-high activity over the July-September period. Pent-up demand was largely exhausted by September and we expect a return to more normal levels later this fall.

Rental markets cooled in some of Canada’s largest and least affordable cities

Following years of steady increases, rent is now declining in Toronto, Montreal and Vancouver, especially in higher density, downtown locations. Underlying the shift: is a surge in rental supply as the short-term rental business dries up and new purpose-built rental and condo units are completed. It all comes at a time when many renters have come under heavy financial pressure. Renters tend to earn less than homeowners, and it’s been lower-income and younger Canadians who suffered the most job losses during the pandemic. Demand near post-secondary institutions has softened too, due to the switch to online study and the closing of our border that kept many foreign students abroad.

Condo investors are looking to sell

As rents soften and vacancies rise, condo listings are spiking in Toronto, Montreal and Vancouver—albeit from low levels. New, stricter regulations in Toronto are adding to the impulse to sell – at a time when new condo completions are bringing more units to the Toronto and Vancouver.

City-dwellers are pulling up stakes on a quest for larger living spaces—often in cottage country

Big-city living has lost some of its luster with social distancing measures severely restricting cultural life and socializing opportunities. Working and studying from home is now a reality for many, further eroding the attachment to big cities. Meantime, affordability issues are driving many Canadians further afield into smaller towns and cottage country, where larger living spaces are available. Clearly COVID-19 has lit a fire under cottage country real estate.

A silver lining? The pandemic made it ‘more affordable’ to own a home

With the Bank of Canada’s overnight rate cut to close to zero and sharp declines in bond yields mortgage rates have been pushed to their lowest levels on record. This slightly reduced mortgage payments on a home priced at market value despite prices continuing to rise at an accelerating pace in most of Canada. Generous government income support programs for households most affected by COVID-19 also made it easier to carry mortgage payments. Overall, Canadian households received more money ($56 billion) from government aid programs such as CERB and other transfers in the second quarter than they lost in wages and salaries due to the pandemic ($23 billion). On net, household disposable income spiked 11% in Canada. This substantially increased buyers’ purchasing power.

A key pillar of Canadian housing demand has been shaken: immigration

COVID-19 has severely disrupted the flow of immigrants moving to Canada—a major source of housing demand. In the second quarter of 2020, the number of new permanent residents plummeted 64% and more non-permanent residents left our country than came to it. The impact was dramatic: total net migration collapsed 94%. With the border poised to remain closed to all but essential travelers, and most post-secondary students continuing to study at home until immunization from COVID-19 reaches high levels in Canada and abroad – immigration is unlikely to rebound soon. To date, weak in-migration has had minimal impact on Canada’s overall housing market. But if sustained, we expect it will temper rental demand in larger markets as immigrants tend to rent in their first 5-10 years after landing into our country. This could have negative repercussions for condos and longer term, an extended period of weak in-migration could deplete future cohorts of first-time homebuyers.

The pandemic put many homeowners on the defensive

The sheer economic shock of COVID-19—with unemployment soaring to unprecedented highs—directly impacted many Canadians and put many others on the defensive. Almost 780,000 people opted to defer mortgage payments since the start of the pandemic, representing 16% of mortgages in bank portfolios. By the end of August, the vast majority of mortgage holders whose deferral period has expired had resumed regular payments. However, it remains unclear how many will ultimately be able to continue as outlook for jobs remains bleak for many Canadians. This poses a risk for the housing market, especially in areas where the economy is shakiest. Financial strains could potentially unleash a wave of properties for sale.

Robert Hogue is a member of the Macroeconomic and Regional Analysis Group, with RBC Economics. He is responsible for providing analysis and forecasts for the Canadian housing market and for the provincial economies. His publications include Housing Trends and Affordability, Provincial Outlook and provincial budget commentaries.

Disclaimer (RBC)

Even the most bullish housing observers would have had a tough time anticipating just how quickly Canada would bounce back from the pandemic shock that froze up market activity in the late winter and spring.

But, after what RBC Senior Economist Robert Hogue calls a “spectacular rally,” the market has fully recovered and then some. National home sales hit an all-time high for September, climbing over August and up 46 percent over 2019’s total for the same month.

What comes next, however, is still shrouded in uncertainty.

In commentary published earlier this month, Hogue said that while the summer housing rally had been extended into September, the market has likely expended all the pent-up demand that had accumulated from earlier in the year at the height of the pandemic shutdowns.

The economist wrote that the market is set to cool off without the pent-up demand to keep it aloft. Tight supply relative to current demand for housing will also have an impact on sales numbers through the fall.

In what will be long remembered as a bizarre year for Canada’s housing market, it’s far from unusual for home sales to slow as the year winds down. But Hogue believes the next few months should at least offer some clues as to where the market is heading in 2021.

“We’ll see whether low interest rates and changing housing needs can keep demand boiling hot, or whether the exhaustion of pent-up demand and plummeting immigration will cool things down,” Hogue wrote.

“We’ll also learn how many current homeowners will be in trouble once mortgage payment deferrals expire and are forced to sell,” he added.

RBC has maintained a relatively positive outlook on the country’s housing market through the pandemic. Hogue said that answers to these questions, as well as a better view into how the second wave of COVID-19 plays out, should provide a better understanding of the risks as we move into the second calendar year of a pandemic-affected housing market.

It was another record-breaking month for the Canadian housing market. September sales rose 45.6 percent over the previous year with no obvious signs of slowing after several months of remarkable levels of buyer activity.

Sales rose in almost all Canadian housing markets in September, amounting to a nationwide total high that was enough to beat the previous record for the month by a margin of 20,000 transactions, according to data published today by the Canadian Real Estate Association (CREA).

September records were broken on the pricing side as well, with the national average sale price increasing by 17.5 percent over the previous year to $604,000. This marked the first time that the national average exceeded $600,000. CREA noted that the soaring average sale price is heavily influenced by robust activity in the country’s two most expensive markets — Toronto and Vancouver.

CREA Senior Economist Shaun Cathcart wrote that the usual suspects were driving the record-breaking levels of activity in the country’s housing markets, with pent-up demand, government income support, rock bottom low interest rates and job losses being concentrated on lower wage workers all cited.

“But I think another wildcard factor to consider, which has no historical precedent, is the value of one’s home during this time. Home has been our workplace, our kids’ schools, the gym, the park and more. Personal space is more important than ever,” Cathcart said in a media release.

Commenting on yet another release of record-breaking housing market data, TD Economist Rishi Sondhi noted that increases in the supply of homes for sale and a pandemic-driven slowdown in population growth that was less severe than anticipated likely played a role.

“Also, instead of travelling during the traditional July and August vacation periods, people stayed home on account of the pandemic. This gave them more opportunities for buying and selling, which they likely took advantage of,” Sondhi wrote.

The past three months have been a remarkable show of strength during an economically tumultuous period, but many market experts believe that this pace cannot be sustained over the long term.

BMO Senior Economist Robert Kavcic wrote in response to the CREA data that while the bank doesn’t “subscribe to the deeply bearish view on Canada’s housing market,” there are enough headwinds building that the market should cool down in the months ahead.

Wuhan, the city at the center of the coronavirus pandemic, had the most tourists of any Chinese city during a public holiday in October. Wuhan is overcoming its pandemic past and benefiting from its hero-city status to become a top travel destination

 

 

Bank is assuming no widespread lockdowns are coming back, and that there will be a vaccine by 2022

The Bank of Canada says it has no plans to change its benchmark interest rate until inflation gets back to two per cent and stays there, something it says isn’t likely to happen until 2023.

The central bank said Wednesday it has decided to keep its benchmark interest rate steady at 0.25 per cent. The news was expected by economists, as although the economy is showing signs of recovering from the impact of COVID-19, things are still a long way from normal, so cheap lending will be needed for a long while yet.

The bank outlined a fairly bleak assessment of the worst case scenario when it laid out its last Monetary Report in July. But the roughly eight months since COVID-19 began in Canada have given the bank a clearer picture of how things are shaking out, even if the picture isn’t always rosy.

“With more than six months since the onset of the pandemic, the Bank has gained a better understanding of how containment measures and support programs affect the Canadian and global economies,” the bank said.

“This, along with more information on medical developments related to COVID-19, allows the bank to now make a reasonable set of assumptions to underpin a base-case forecast.”

Rocked by COVID-19, the central bank says it expects Canada’s economy will shrink by 5.7 per cent this year, but grow by 4.2 per cent next year, and 3.7 per cent in 2022. Inflation, meanwhile, is expected to be 0.6 per cent this year,
1.0 per cent next year, and 1.7 per cent in 2022.

 

Those growth and inflation projections, however, are based on two leaps of faith: that there won’t be a second — or third — widespread lockdown in Canada, and that a vaccine or some sort of effective treatment will be widely available by the middle of 2022 at the latest.

“The breadth and intensity of re-imposed containment measures, including impacts on schools and the availability of child care, could lead to setbacks,” the bank said in the quarterly Monetary Policy Report that accompanied the rate decision.

Impact on mortgages

The bank’s outlook and rate decisions have real world impact on Canadian borrowers and savers. Fixed-rate mortgages are priced based on what’s happening in the bond market, but the central bank’s rate has a direct impact on variable rate mortgages.

So telegraphing that rates are going to stay low for long presents something of a conundrums for borrowers, says James Laird, Co-founder of Ratehub.ca and president of mortgage brokerage CanWise Financial.

“There is no wrong answer right now,” Laird said.

“Canadians who derive value from certainty should choose a fixed rate. For Canadians who are open to a little more risk, considering a variable rate is certainly appropriate, since the Bank is committed to keeping rates where they are for at least another two years.”

Economist Sri Thanabalasingam with TD Bank says the bank made it clear on Wednesday that the road to a full recovery will be slow.

“There’s a long way to go for the Canadian economy to emerge out of this crisis, ” Thanabalasingam said.

“The path forward is filled with uncertainty, most of which could set the recovery back a step or two, [so] the bank is set to continue to provide monetary support for many years to come.”

 

Source: CBC News

From Canada Day to the summer wind down at the end of September, buyers fanned out across Toronto’s ‘905’ suburbs and scooped up 3,834 new condo units.

The surge in buyer activity over 2020’s third quarter meant that new condo sales in the 905 region jumped 106 percent when compared to the same period a year ago, according to data released today by research firm Urbanation.

The boost in condo sales in the city’s suburbs roughly matched buyer enthusiasm for new and resale single-family homes outside the City of Toronto’s boundaries in a phenomenon that RBC Senior Economist Robert Hogue recently called the “pandexodus” from the city.

Buyers were less enthused about purchasing new condos in the City of Toronto during the third quarter, with sales declining 16 percent from the previous year to 2,536 units.

“The third quarter showed impressive demand for new condominiums in the GTA amid the pandemic, with the suburban markets leading the way,” said Urbanation President Shaun Hildebrand.

“This regional shift in activity is expected to continue as buyers gravitate to less expensive markets while the downtown area faces supply challenges in the near term,” he continued.

The heightened activity in the 905 region was more than enough to offset the weakness seen in the city-proper, leading overall new condo sales to rise 30 percent over the previous year across the entire Greater Toronto Area.

It was not, however, enough to lift year-to-date new condo sales past where they stood three quarters into 2019. There were 13,454 new condos sold between January and September 2020, down 22 percent from the same period last year.

On the pricing front, Urbanation said the average selling price for condos launched in the third quarter was $1,044 per square foot, up 3.5 percent over a year ago. New condos launched in the 905 region had an average price per square foot of $915, while City of Toronto condos came in at $1,275.

The stark price disparity between the two regions illustrates Hildebrand’s point of buyers gravitating to less expensive markets as one of the main reasons for the 905 sales surge.

Canadian home prices posted across-the-board monthly gains in September, led by the Ottawa-Gatineau and Quebec City markets, for the second-strongest September on record, data showed on Tuesday.

The Teranet-National Bank Composite House Price Index, which tracks data collected from public land registries to measure changes for repeat sales of single-family homes, showed prices rose 1.1 per cent in September from August.

In addition to the 11 major markets included in the index, Teranet also tracks 20 other cities across the country. All 31 posted gains for the month, the first across-the-board monthly gain since tracking of the current bundle began in 2009.

Prices were up 2.3 per cent in the capital region of Ottawa-Gatineau and 2.2 per cent in Quebec City, with Montreal and Hamilton both up 1.9 per cent in September from August.

On a year-over-year basis, the index was up 6.7 per cent in September, rising at a faster pace than the previous month. The 12-month gain was also lead by Ottawa-Gatineau, up 14.3 per cent, followed by Halifax at 12.2 per cent.

Calgary prices were down 2.6 per cent on the year, while Edmonton prices were 0.8 per cent lower.

Price gains in Hamilton and in six of the seven other Golden Horseshoe cities around Toronto were higher than in the Greater Toronto Area itself, reinforcing the view that many urbanites are fleeing to satellite cities for more space amid the coronavirus pandemic.

Despite a remarkable surge in new listings, the average resale condo price in the Toronto region rose 8.3 percent to $633,484 in the third quarter.

The third quarter data, published today by the Toronto Regional Real Estate Association (TRREB), showed that condo sales rose in the July to September period by 10.5 percent compared to the same period a year ago.

There were 7,072 sales recorded across the Toronto region, up substantially from the 3,459 sales logged during the previous quarter, which included figures from the market’s pandemic-induced freeze through April and May.

Despite the strong bounce in sales, activity was significantly outpaced by new listings hitting the market. There were 17,613 new listings in the third quarter, up 84.6 percent over the same period last year. TRREB reported that active listings at the end of the quarter were more than double the number recorded at the end of the third quarter in 2019.

TRREB President Lisa Patel said it was a strong showing for the condo market, but the low-rise market had performed better during the same period.

“The condominium apartment segment experienced the second best third quarter on record in terms of sales and the best third quarter on record in terms of the average selling price,” said Patel.

“However, while the pace of year-over-year condo sales and price growth remained strong, it was lower than that reported for low-rise home types,” she continued.

Patel noted that condo investors opting to sell their units had an impact on supply. A weakened rental market, especially in downtown Toronto, and new by-laws around short-term rentals were major motivating factors for investors’ decisions to sell.

The increase in supply has yet to lead to any measurable price plateaus or declines in the condo market. Beyond the 8.3 percent rise in the average condo selling price recorded across the Toronto region, the City of Toronto saw a comparable annual increase to $680,963 in the third quarter.

“While condo buyers certainly benefited from more choice in the third quarter compared to the past few years, there was still enough competition between buyers to support average selling prices substantially above last year’s levels,” said TRREB Chief Market Analyst Jason Mercer.

“It is important to note that one quarter does not make a trend, either on the demand or supply sides of the market. How the relationship unfolds between condo sales and listings over the next three to six months will dictate the longer-term direction for selling prices,” Mercer added.

source: livabl

Last week was the Vancouver Real Estate Forum. Benjamin Tal (chief economist at CIBC) opened things up, as he usually does, and he was pretty candid about what might be coming this winter. Here is an excerpt from a recent Globe and Mail article summarizing the event:

“It’s reasonable to assume that the next six months will not be very pretty,” said Mr. Tal. “The honeymoon of the summer is basically over. Now we enter the winter months, and I think the next few months will be much more difficult. We will have a situation where we will clearly see a second wave, and it’s already starting. This second wave will overlap with the flu season, so everybody will be very confused. The fear factor will rise, and that’s something we have to take into account when we look at the trajectory of the economy.”

Indeed, today kind of feels like the official start of the second wave. Here in Toronto, indoor dining, gyms, and a bunch of other things were just shut down for the next 28 days.

But I think the more important takeaway from the article is this one here: the fundamentals around Canadian real estate remain incredibly strong. Another excerpt:

“Let’s visit the market in 2023: I suggest the market will show the same trend we have seen in as 2019. This is a pause, but the fundamentals of the real estate market in Canada are so strong that the demand factor will continue to be there and supply will be limited. I suggest that after a two- to three-year period of some sort of softness, despite the V-shaped recovery that we are seeing, I see continuation of the trend.”

As I’ve said before on the blog, it’s easy to get caught up in shorter-term and ephemeral headlines. But if one can look through some of that to the other side of this health crisis, I think we would all be in a position to make better decisions.

As a general rule, I don’t like making long-term real estate decisions based on what is expected to take place in the next 6 months.

Google continues to expand its footprint on Canadian soil with the expansion of three massive new offices, two of which will be in Ontario and a third in Quebec.

Our fine city will be home to one of the province’s new spaces, setting up shop on King Street East, while the other two offices will open in Waterloo and Montreal.

This comes nineteen years after Google opened the doors to its first office in Toronto, which only had one salesperson at the time. Today, the tech giant employs over 1,500 people across its current Canadian offices, including engineers, sales leaders, and AI researchers.

When the three new offices are finished being built in 2022, Google says its Canadian offices will accommodate up to 5,000 employees.

The new Toronto digs will be located at 65 King East, occupying 400,000-sq.ft of office space across 18 floors in the city’s newest, “next-generation” office development.

“We are extremely pleased to announce that 100% of the office floors of 65 King East are now leased to Google: one of the most prominent, influential and well-recognized companies in the world,” said Dean Cutting, a partner of Carttera, a Canadian real estate investment fund manager and developer.

“Our vision for 65 King East has always been to combine innovative office architecture and an employee-centric workplace design with a dynamic, forward-thinking organization. Google truly recognizes how 65 King East promotes sustainability, employee wellness, collaboration, productivity and health,” said Cutting.

“The fact that Google made a long-term commitment to our project is a testament that we are leading the future of innovative office design. We look forward to a long-term collaborative relationship with Google for many years to come.”

With proximity to the TTC and Union Station, the King East office building will also feature over 18,000-sq.ft of outdoor terraces, 196 bike stalls, and 10,675-sq.ft of retail space, while also incorporating smart building technologies and sustainability. With Wired Score Gold already accomplished, 65 King East has been designed to achieve LEED Gold certification, according to Carterra.

September was another banner month for the Toronto region’s housing market and no property type was hotter than detached homes in the suburban areas surrounding the city.

Of the 30 suburban regions tracked by the Toronto Regional Real Estate Board, 10 saw detached home prices climb by over 20 percent last month compared to September 2019.

Scugog, Adjala-Tosorontio, Uxbridge, Bradford-West Gwillimbury and Clarington made up the top five Toronto region suburbs that saw the largest percentage increases in their detached home segments.

At the top of the list, the average detached home in Scugog, a township northeast of Toronto, skyrocketed 37.2 percent to $870,078 in September. Detached homes in Adjala-Tosorontio also saw a 30.5 percent price increase from the previous year, rising to $895,480. The suburbs that rounded out the top five all recorded price increases in the 25 percent range over September 2019.

The other suburbs that saw 20-percent-plus price increases for detached homes were Georgina, Innisfil, Milton, Whitchurch-Stouffville and Whitby.

“Low mortgage rates, in combination with Millennial demand, is driving demand for ground-related housing. As homebuyers search for affordable ground-related housing, they are looking beyond the 416 boundaries,” wrote Diana Petramala and Victoria Colantonio, researchers at Ryerson University’s Centre for Urban Research (CUR).

In a recent research note titled “September TRREB data show 905 region leaving the 416 area in the dust,” Petramala and Colantonio wrote that the strength seen in last month’s sales and price figures went beyond pent-up demand accumulated through the March to May period.

The CUR researchers pointed out that new listings were actually rising faster in the 416, or City of Toronto, despite sales activity being more concentrated in the suburban 905 areas. But with the pace of sales more than offsetting the weakness in the city’s core condo market, the overall regional market was firmly in seller’s territory, with home seller’s holding more bargaining power, Petramala and Colantonio said.

This means there’s insufficient supply in the form of new and active listings to meet buyer demand, pushing home prices higher in suburban areas that are now more coveted than ever.

Here’s some data from the Pew Research Center looking at the percentage of young people (18- to 29-year olds) in the US that live with at least one parent. It it based on an analysis of monthly Census Bureau data and is obviously interesting/relevant given that this pandemic seems to have precipitated a number of people moving back home. As of July of this year, 52% of young adults were thought to be living with at least one parent, which is up from 47% back in February.

At first I was surprised to see these numbers as high as they are. But it’s really the 18-24 age bracket that is driving this number up, which makes sense given that a chunk of this demographic is probably in school, not working, and now unable to do much on a campus. Among 25- to 29-year olds, the range is significantly lower, with just over a quarter (26% -> 28%) living with their parent(s).

What I’m curious about now, after seeing this chart, is what is driving some of these regional, ethnic, and gender differences? Why are young midwesterners seemingly less likely to live with a parent compared to those in the northeast? Is it cultural? Economic? Or something else? And is the above an indication that maybe women are more independent than men?

Home sales in major markets across the country delivered more impressive increases in September as activity continued to rebound from the lows seen in April and May.

Market data published over the last week by local real estate boards saw trends first observed in the early summer remain fairly uniform across the country, especially the ongoing divergence of low-rise home sales and prices and activity seen in the condo segment.

Commenting on the latest set of data to emerge from Canada’s major housing markets in the pandemic era, RBC Senior Economist Robert Hogue noted that demand for single-detached and other low-rise homes appeared “universally stronger” when compared to condos.

“The pandemic is altering the housing needs of many current owners, which simultaneously shifts demand from condo apartments to single-detached homes and other low-rise categories, and boosts the supply of smaller condos in core urban areas. These trends have put single-family home prices on accelerating trajectories,” Hogue wrote.

Average condo prices have remained on a much less impressive upward trajectory during the course of the pandemic thus far, but Hogue doesn’t believe this will last. With buyers looking elsewhere and new listings steadily rising, the economist said that condo prices will lose ground in 2021 in some of the country’s major urban markets.

Zeroing in on Toronto, Hogue pointed to September’s 90 percent year-over-year increase in new condo listings as a sign that demand-supply conditions were softening for the segment. Meantime, the Toronto region’s MLS Home Price Index hit a three-year high growth rate of 11.6 percent over September 2019’s reading, with the “heat,” as Hogue put it, concentrated in the market’s low-rise segments.

Detached home prices also accelerated in Vancouver, up 7.8 percent in September on an annual basis compared to the 6.9 percent increase recorded in August. Home sales increased 77 percent over the previous year, while new listings rose 18 percent.

The divergence of supply and demand in the detached and condo segments was not as pronounced as what was observed in Toronto, but Hogue believes it will still impact prices for both housing types. New condo listings rose faster than sales, with the former recording a 44 percent increase over the previous year and the latter logging a 37 percent rise. This meant condo prices rose a calmer 4.5 percent annually.

“We expect prices to heat up even more in [the detached home] segment in the near term. We expect more plentiful inventories will do the opposite for condo prices,” Hogue wrote.

The Toronto real estate market continued its brisk pace in September setting a new record for the number of sales for the month at 11,083, according to the latest market statistics from the Toronto Regional Real Estate Board (TRREB).

Although 2019 was a good year for Toronto real estate, and despite a major slowdown caused by the COVID-19 pandemic, all losses appear to have been recouped as the first nine months of 2020 are now up approximately one per cent when compared to the same period in 2019.

“Improving economic conditions and extremely low borrowing costs sustained record-level sales in September, as we continued to account for the substantial amount of pent-up demand that resulted from the spring downturn,” said Lisa Patel, president of TRREB. “Further improvements in the economy, including job growth, would support strong home sales moving forward. However, it will be important to monitor the trajectory of COVID-19 cases, the related government policy response, and the impact on jobs and consumer confidence.”

Market activity in September also resulted in considerable price appreciation especially in the low-rise sector of the market with average selling price for all home types up 14 per cent from last September. Condo prices continued to grow, but at a slower pace.

Other important indicators show that active listings continue to rise and now sit at more than 18,000 throughout the region, up from 16,662 in August. Month-to-month average price of detached and semi-detached homes dropped from August to September, while prices for townhomes and condos increased.

“On a GTA-wide basis, market conditions tightened in September relative to last year, with sales increasing at a faster pace than new listings,” said Jason Mercer, TRREB’s chief market analyst. “With competition between buyers increasing noticeably, double-digit year-over-year price growth was commonplace throughout the region in September, resulting in the overall average selling price reaching a new record.”

Toronto home prices increases were eclipsed by other regions almost across the entire board with Halton and Durham regions showing the highest rate of price growth. The average price growth in the entire 905 region was 16.9 per cent while the city of Toronto was under 10 per cent.

Summer may have drawn to a close but the Toronto real estate market remained hot well into the start of the new season, with September being a record-breaking month for home sales in Canada’s largest city.

According to the Toronto Regional Real Estate Board (TRREB), it was the best September on record for home sales in the Toronto-area, with 42.3% more sales closing last month than in September of last year.

Important to note, even amid a global pandemic that saw the economy come to a near halt and COVID-19 lockdowns prevented home showings, sales through the first nine months of 2020 still managed to be up by 1% compared to the same period in 2019.

TRREB says 11,083 existing homes were sold in the Toronto-area in September, at an average price of $960,772 — up by 14% year-over-year.

TRREB President, Lisa Patel, says improved economic conditions and “extremely” low borrowing costs helped sustain September’s record-breaking levels, as did built-up demand left over from the disrupted spring season.

“Further improvements in the economy, including job growth, would support strong home sales moving forward. However, it will be important to monitor the trajectory of COVID-19 cases, the related government policy response, and the impact on jobs and consumer confidence,” said Ms. Patel.

Year-over-year sales growth in September continued to be driven by ground-oriented market segments, including detached and semi-detached houses and townhouses. Annual growth rates were also higher for sales reported in the GTA regions surrounding the City of Toronto.

Here in Toronto, the number of new listings (8,689) and the number of sales (3,555) at the end of September were both up on a year-over-year basis. While new listings were up strongly for all home types, growth in sales of new condominium apartments (1,549) outstripped growth in the city’s other market segments.

But it’s not just sales and listings that soared in September, as the average selling price of all home categories in the 416 — low-rise market segments and condos included — rose last month to $1,022,051, up $9,545 from August’s average.

The September numbers also showed that those looking to enter the housing market are turning to buy more ground-level homes, as detached houses in Toronto sold for $1,487,122 on average, a 9.4% increase compared to last September. What’s more, the 1,161 detached house transactions in Toronto last month represented a 28.1% year-over-year increase, while the 421 semi-detached home sales showed a 48.8% increase from last September.

While condo sales rose 7% year-over-year in Toronto in September, the 905 regions saw the biggest jump in condo transactions with a 32.1% increase. Condo prices also rose more notably in the 905-area, up 8% to $537,354 compared to 7.7% and $686,191 in Toronto.

“On a GTA-wide basis, market conditions tightened in September relative to last year, with sales increasing at a faster pace than new listings,” said Jason Mercer, TRREB’s Chief Market Analyst. “With competition between buyers increasing noticeably, double-digit year-over-year price growth was commonplace throughout the region in September, resulting in the overall average selling price reaching a new record.”

TRREB CEO John DiMichele says the housing market recovery experienced throughout the summer benefitted the broader economy as well.

“Home sales reported through TRREB’s MLS System result in billions of dollars in spin-off expenditures, support for tens of thousands of jobs, and billions of dollars in taxes paid to all levels of government. The demand for housing and the related economic impacts will continue in the post-COVID period as population growth resumes. Policymakers will need to continue their efforts to bring more housing supply on line to meet this longer-term demand,” added DiMichele.

Toronto’s housing market continued on a tear in September, breaking the record for homes sold in the month and exceeding 11,000 total transactions for the second time in three months.

The 11,083 homes that changed hands in the region last month also meant that September was the third consecutive month that the Toronto market broke a sales volume record since the pandemic recovery began.

The sales total was up 42.3 percent over the previous year and the performance was enough to push 2020’s home sales to date past the same nine-month period in 2019. According to the Toronto Regional Real Estate Board (TRREB), which released the data today, sales through the first nine months of 2020 were up one percent compared to the previous year.

It’s a headline figure that surely would have surprised many watching the market in April and May, when sales were down 67 percent and 53.7 percent on an annual basis, respectively.

Despite the swift market recovery, TRREB President Lisa Patel was careful not to provide an overly optimistic outlook for the remainder of the year as the pandemic wears on and cases of COVID-19 rise in the region.

“Improving economic conditions and extremely low borrowing costs sustained record-level sales in September, as we continued to account for the substantial amount of pent-up demand that resulted from the spring downturn,” said Patel.

“Further improvements in the economy, including job growth, would support strong home sales moving forward. However, it will be important to monitor the trajectory of COVID-19 cases, the related government policy response, and the impact on jobs and consumer confidence,” she continued.

As has been the case since the market recovery began, the detached, semi-detached and townhome segments were the primary drivers of annual sales growth. While the condo segment has seen solid year-over-year growth, the 14.6 percent annual increase lags far behind the 54.7 percent increase seen in the GTA detached home segment.

On the pricing front, the MLS index price for the Toronto region was up 11.6 percent over September 2019. The average sale price across all property types was $960,772, up 14 percent over the previous year and a new record for the region. Like sales volume, it was the low-rise segment that was responsible for the majority of the price growth momentum.

“On a GTA-wide basis, market conditions tightened in September relative to last year, with sales increasing at a faster pace than new listings,” said TRREB Chief Market Analyst Jason Mercer.

“With competition between buyers increasing noticeably, double-digit year-over-year price growth was commonplace throughout the region in September, resulting in the overall average selling price reaching a new record,” he added.

Fact: living in Toronto is expensive. Exactly how expensive depends on where you live in the city and what you live in — obviously. But new data from shows just how much prices for apartments and single-family homes have fluctuated over the past five years and it’s safe to say, prices have definitely gone up.

In a new report, looked at whether home prices have grown or contracted in 15 Canadian markets compared to 5 years ago by reviewing benchmark prices for apartments and single-family houses with data from the Canadian Real Estate Association (CREA) from August 2020 and August 2015.

In analysis, benchmark apartment prices rose over 50% in 7 of 15 markets over the past 5 years — the majority of which were in Southern Ontario. However, Fraser Valley, BC saw the highest 5-year increase overall, with prices rising 104%. What’s more, 7 out of 15 markets included in the analysis also noted a 50% or higher increase in the benchmark price for single-family houses, with the Niagara Region leading the pack.

On a local level, prices in Toronto have seen substantial increases, with apartment prices rising 78%, bringing the average price in 2020 to $592,900. Prices for single-family homes in the area rose by 51% to reach an average of $999,200.

Across the region, Niagara led price growth in the area for apartments, with the benchmark price growing 87% to $354,400. This was followed by Toronto, then Hamilton-Burlington, where the price rose 74% to $471,100, and finally Guelph, where there was a 73% increase in the benchmark apartment price bringing the 2020 average to $379,000.

As for single-family homes in the analysis, the Niagara Region experienced the highest growth — the price almost doubled — with an impressive 95% increase in 5 years to reach $490,500 in 2020. This was followed by Hamilton-Burlington with a 71% increase, Guelph with 63%, Fraser Valley with 62%, Ottawa with 53%, and Victoria with 50%.

Furthermore, the analysis revealed that Prairie markets (Calgary, Edmonton, Regina, Saskatoon, and Winnipeg) are some of the few regions where the benchmark apartment and single-family house is more affordable today than it was 5 years ago.

analysis follows national home sales and listings continuing to climb in August, as some of the pressure from pent-up demand was released this summer when pandemic restrictions eased. In turn, buyers continued returning to the market with refocused housing priorities — with a growing number beginning to look to suburban and rural markets in search of more space relative to what’s available in denser urban cities.

However, despite the surge in demand, the Canada Housing and Mortgage Corporation (CMHC) recently reiterated their forecast that home prices are likely to dip by as much as 18% in the coming months — citing pandemic-induced unemployment and slower in-bound migration weighing on demand, particularly in metropolitan cities like Toronto and Vancouver. In turn, RE/MAX called CMHC’s prediction “fear-mongering.”

If one thing’s for certain, the Toronto luxury real estate market has remained resilient in the face of the global pandemic.

And while Ontario braces itself for the already-in-motion second wave of the novel coronavirus, according to Royal LePage, there are currently interesting buying opportunities in the Toronto and Greater Toronto Area (GTA) luxury condo market, as buyers seek larger homes to live and work in the pandemic.

This week, Royal LePage released its Luxury Property Report, which includes insights regarding luxury properties — which are defined as having a value above three times the median price of a house or condominium in its region — specifically for the Toronto and GTA region.

According to the report, from March 15 to September 9, the price of a luxury condo in Toronto dipped by 1.6% year-over-year to $1,870,000, while in the GTA, the price fell by 3.6% year-over-year to $1,830,000.

Luxury houses in the city, on the other hand, saw gains of 5.4% to a median price of $3,187,500. In the GTA, luxury house prices increased by 5.9% to $ 3,177,500.

Cailey Heaps, managing director and sales representative, Royal LePage Real Estate Services, says demand for luxury properties in Toronto has been driven by low inventory, low-interest rates, and a “renewed focus on lifestyle to accommodate for our new normal.”

Heaps added that buyers seeking luxury property are focused on lifestyle when looking for their perfect home.

“With travel off the table for the near future and many working from home, features such as a home office, outdoor space, a pool and walkability are becoming increasingly important in their search criteria,” said Heaps.

“Appropriately priced homes in the established Central Toronto neighbourhoods such as Rosedale, Leaside, and Lawrence Park often sell in a matter of days. Multiple offer situations still occur but to a lesser degree than in the pre-COVID landscape, giving buyers an opportunity to purchase in a slightly less competitive market.”

While the luxury condominium market has faced some challenges over the recent months, Heaps says the new rules with respect to short-term rentals, higher inventory, and the increased risk that comes with communal spaces or common areas have meant that condos did not perform as well as the freehold market. However, she says buyers will find more selection compared to the inventory of luxury houses.

Heaps noted that while all luxury buyer demographics are still active, boomers are quieter this year than previous years. However, many cautious boomers selling their luxury home have the opportunity to stay at their cottage or a secondary property as an additional option during the pandemic.

Looking towards the remainder of the year, Heaps noted that current demand is slowing, which is typical of fourth-quarter activity.

On a national level, the median price of a luxury house increased 1% year-over-year to $2,500,000, while the median price of a luxury condominium remained constant at $1,250,000.

Royal LePage says recent steep increases in overall Canadian home prices have pushed more properties over the national lower price threshold, increasing the overall quantity of Canadian homes defined as luxury properties.

In light of the past six months of COVID-19-triggered uncertainty, home sales in Canada have been shockingly brisk as a combination of FOMO and low interest rates keep drawing buyers into the market. The feeding frenzy won’t last – plenty of organizations are expecting a major correction in the coming months – but waiting until it passes may not be the best course of action according to one mortgage insider.

In his recent dealings with clients seeking preapprovals, Alex Leduc, who does double duty as both Mortguage’s principal broker and its CEO, came to notice what could be a chilling trend for Canadians with variable incomes. Faced with earning a significantly lower income in 2020 because of pandemic-related busines disruption, this particular cohort of prospective buyers – hourly wage earners, the self-employed, anyone whose income depends heavily on bonuses or commissions – could see their buying power plummet – until 2023.

“It’s not necessarily just homebuyers,” Leduc says. “It would be anybody who is buying, or even potentially switching mortgages, who has a variable form of income that would be effected.”

When lenders evaluate borrowers with variable incomes, Leduc explains, they look at notices of assessment, T4s, and T1s for the two most recent years and calculate the average between them. The lesser of the two-year average and the most current year’s income becomes a person’s qualifying income. Anyone buying in 2020 will use 2018 and 2019’s records – no problem there – but buyers who wait until 2021 will be evaluated using 2020 income levels. For a significant portion of the population that experienced a disruption in income this year, that means less buying power.

“As of now, lenders are not going to use your 2020 NOA or T4 because you don’t have it yet. But once you have it, you have to use it,” Leduc says.

In a recent blog post, Leduc provided an example that highlights the potential problem: A buyer earned $96,000 in 2018 and 2019, meaning her two-year average qualifying income this year is also $96,000. But if her 2020 income falls to $80,000, much lower than the two-year 2019-20 average of $88,000, that becomes her qualifying income for 2021. Leduc calculates that this borrower would see a 16 percent reduction, equivalent to around $74,000, in purchasing power.

Because lenders require two years’ worth of records, the problem will persist until borrowers get their hands on 2022’s financial docs. In 2022, borrowers will still be hampered by their 2020 earnings. It won’t be until 2023, when 2021’s and 2022’s earnings are taken into consideration, when these buyers might see their buying power return to today’s levels.

“It really does have a significant impact,” Leduc says.

With 2020 being the nightmare it is, some may wonder if lenders will adjust their metrics and attribute any loss in income to the pandemic rather than to borrowers themselves. Leduc doesn’t currently see much of an appetite for such changes among lenders.

“Some lenders are pretty cut-throat about it. A lot of them don’t sway from policy,” he says. “No one’s come out and said, ‘We’re going to make policy changes or exceptions to this.’ It’s really business as usual.”

He does, however, see a scenario where, if an abundance of Canadians see their buying power evaporate next year, lenders feel pressured to change their income calculations. If that happens, he says, they could decide, when looking at 2019-20 or 2020-21 earnings, to use whichever is higher to determine qualifying income. They could also potentially look at the past three years and use the two highest incomes to calculate an average.

Leduc insists that he’s not trying to generate panic. Plenty of Canadians with variable earnings will still be able to qualify next year and the year after. That’s why it’s important for them to sit down with their mortgage brokers now and start running a few possible scenarios. Leduc says he is working with his clients to ensure they understand the situation and can set reasonable expectations.

With a potential price correction on the way, buyers may feel safe waiting, thinking that even if their income for 2020 falls, a mini housing crash may help compensate for a shortfall in qualifying income.

That’s not a strategy Leduc encourages. Pointing to the example of the buyer whose purchasing power fell 16 percent, he says, “Even if we had price decreases, I don’t think it would be to the extent of 16 percent within a year. That would be pretty aggressive, I think.”

The last few weeks of summer was an “unusually” busy time for the Greater Toronto Area (GTA) new home market, as over 4,500 new homes were sold, according to the Building Industry and Land Development Association (BILD).

On Monday, BILD announced that a total of 4,539 new homes sold last month, up 217% from August of last year and 119% above the 10-year average, according to Altus Group, BILD’s official source for new home market intelligence. This also marked the highest number of new home sales for August since Altus Group started tracking in 2000.

During the same time, sales of single-family homes, which include detached, linked, and semi-detached houses and townhouses (excluding stacked townhouses), with 1,930 units sold, were up 355% from last August and 139% above the 10-year average.

What’s more, condominium apartments, including units in low, medium and high-rise buildings, stacked townhouses and loft units, accounted for 2,609 new home sales, were up 159% from August 2019 and 106% above the 10-year average.

When breaking it down by municipality, Toronto had the highest number of new condominium apartment sales, with 1,423 transactions in August. Halton followed behind with 483, while York had 365 sales, York had 365, and Durham had 163.

“With the record sales activity and unusual number of project launches we saw in August, it is becoming clear that the COVID-19 pandemic delayed consumers’ housing purchase decisions as well as builders’ project openings,” said Ryan Wyse, Altus Group’s Manager, Analytics, Data Solutions.

“After the normally busy spring months were severely affected by the pandemic and related government-imposed restrictions, we saw much stronger activity than normal during the summer.”

The total number of new homes remaining in inventory in August was 14,331 units, which includes units in preconstruction projects, in projects currently under construction, and in completed buildings.

What’s more, BILD says while the benchmark price for both single-family homes and condominium apartments dipped slightly in August compared to the previous month, it was still up year-over-year. The benchmark price for new condo apartments in August was $972,859, up 15.7% over the last 12 months, while the benchmark price for new single-family homes was $1,169,823, up 8% over the last 12 months.

David Wilkes, BILD President and CEO says while the GTA housing market had a “strong” summer, with the resurgence in COVID-19 cases, the coming months are full of uncertainty. “What is certain is that residential and non-residential construction has played a key role in kick-starting the economy in our region and in Canada, and will continue to do so.”

Wilkes added that BILD is working with all levels of government to remove barriers to building and economic recovery.

Population growth — so, immigration — is a crucial demand driver for the real estate industry, and for the growth of the overall Canadian economy. Last year, Canadian immigration averaged about 28,400 people per month, according to a recent equity research report (on the apartment sector) by TD Bank. The total number for 2019 was 341,175 people.

Not surprisingly, this number fell off in March of this year with the closing of our borders. In March, immigration declined to 18,560 per month and bottomed out in April with only 4,135 immigrants being admitted to the country. This has no doubt been a factor in some of the rent softening that we have seen in the multi-family space.

 

 

While it’s unlikely that Canada will meet its 2020 target of 320,000 to 370,000 new immigrants, it’s important to note that we have seen a fairly swift recovery (see above). In June of this year, the number rebounded to 19,175 new immigrants. And I’m certain that most of this cohort still went straight toward our biggest cities.

It’s also important to keep in mind that Canada’s three-year goal (2020-2022) remains 1 million new immigrants. TD is of the opinion that this target is still attainable, as this “short-term immigration headwind” is likely to flip into a tailwind once our borders become more porous and we get to the other side of this pandemic.

I think it’s pretty safe to say that you could bucket this immigration blip into (1) short-term dislocation. It is not a (3) long-term structural change. Canada remains one of the greatest countries in the world. We will continue to attract smart and ambitious people from all around the world, and most will want to settle in our urban centers.

All of this, of course, will be good for the real estate industry and will be vital to the strength of the Canadian economy as a whole.

Chart: TD Securities

Hotter than the weather in August!!!

Here’s a glimpse of Toronto’s record breaking market.

Whether they take place during a pandemic-fuelled recession or during a period of sustained economic expansion, record-shattering home sales in Canada always seem to be accompanied by the same phenomenon: talk of the country’s “inevitable” housing crash.

Questioning the logic of homebuyers who engage in wild bidding wars in the midst of historic job losses is hardly unreasonable, but saying that behaviour will trigger a catastrophic fall in home prices, like the 18 percent decline projected as a potential outcome by the Canada Mortgage and Housing Corporation in May, is a train of thought Nick Kyprianou, president of RiverRock Mortgage Investment Corporation, is encouraging Canadians to abandon.

Talk of a crash in home prices has been persistent since CMHC first floated its dire 18 percent figure, even though neither CMHC nor any other housing authority, lender or brokerage has provided any evidence or metrics that tie current market activity or the economic slide caused by COVID-19 to plummeting home prices. And yet, the spectre of an 18 percent decline persists, hanging over the market like the reaper’s scythe, just waiting to harvest the souls and credit ratings of unfortunate Canadians.

Kyprianou is another market-watcher who can’t fathom the CMHC’s projection. His theory is that, in determining its absolute, institution-destroying, worst-case scenario as part of its annual report to the Office of the Superintendent of Financial Institutions, CMHC may have concluded that its own breaking point would come if home prices shrank by 18 percent.

“I think [CMHC CEO Evan Siddall] just spouted off the worst-case scenario,” Kyprianou says. “Well, the chance of the worst-case scenario is so remote, everything has to line-up perfectly – multiple times – for it to happen.”

Using five key metrics to compare the current economic situation to that which proceeded the last true housing crash in Ontario (1989-1995), Kyprianou says today’s consumers can remain confident that home values will largely maintain their strength, even as COVID-19 continues to cast its shadow over the Canadian economy.

1. Interest rates
“Interest rates are your biggest factor,” Kyprianou says “If interest rates keep going up, that’s the biggest burden on housing because your dollar just doesn’t go as far.”

Interest rates almost doubled during Ontario’s last crash, rising from from eight to fifteen percent, putting pressure not only on buyers but the province’s builders as well. That is simply not going to happen this time around. The Bank of Canada estimated that it may not raise its key interest rate target before 2022.

2. Unemployment
There is no question that Canada’s employment situation is a worry. Unemployment was 10.2 percent in August 2020, almost double the rate seen in August 2019. But Kyprianou says there’s more to the story than just the headline.

In the early 1990s, when unemployment was hovering around 11 percent, most of the jobs being lost belonged to high earners – middle management, skilled tradespeople, factory workers – who saw their employers close up shop and move their operations to countries like Mexico during the first rocky years of the North American Free Trade Agreement.

“When these jobs are evaporating and the bulk of the unemployed are the higher income earners, that is going to have an effect on housing,” Kyprianou says, adding that most of the labour disruption caused by COVID-19 has been proven to involve low-wage earners who are predominantly renters, not prospective home buyers.

“That’s a big dynamic change,” he says. “You just can’t look at what the unemployment number is. You have to drill down through it and look at who is unemployed.”

3. Equity
Much of the concern expressed by CMHC’s Siddall over Canadian debt levels and high-ratio mortgages is the risk of borrowers being dragged underwater if falling home prices leave them in a negative equity position. Fair enough. But Kyprianou, quoting statistics provided by Canadian Mortgage Professionals, says the vast majority of Canadians have far more than five percent equity in their homes.

In its most recent Annual State of the Residential Mortgage Market in Canada report, CMP found that 88 percent of Canadian homeowners have equity ratios of 25 percent or higher. Among the 6 million homeowners with mortgages, 81 percent have equity ratios of 25 percent or more.

Kyprianou says there is also the concept of emotional equity to consider. Defaulting on a mortgage is seen as an embarrassing failure most homeowners will do all they can to avoid. He saw many of them get resourceful during the last recession – taking on boarders, getting a second job, asking their families for assistance – as a means of making their monthly mortgage payments. He expects the same level of effort from today’s borrowers.

“You gotta make it work,” he says.

4. Taxes
In the early 90s, sky-high personal and corporate tax rates were deemed responsible for driving companies and individual professionals into the waiting arms of the United States. The resulting brain drain eventually led to lower tax rates in Canada, but the damage was done.

With unemployment high and business confidence muted, it is highly unlikely that taxes will see any kind of significant spike over the near-term. Canadians are likely to be up in arms when their CERB payments are taken into account come tax time next year, and the billions in government aid used to prop up the economy for six months will eventually need to be recouped, but it’s safe to say the feds won’t threaten the nation’s economic recovery – or their polling numbers – by implementing any significant new taxes.

5. Immigration
In the 1989-1995 downturn, the problem wasn’t a lack of new Canadians, it was an inability to keep them. The brain drain days are over, but by limiting international immigration, COVID-19 has thrown a wrench into the works. With just over 100,000 permanent residents being welcomed into the country in the first six-months of 2020, Canada has little chance of hitting its immigration target of 341,000 for the year.

Immigration has been a significant driver of all things good in Canada over the past several years – population growth, innovation, economic expansion, home sales – but Kyprianou doesn’t see a fall in immigration numbers having too negative an impact on home prices, largely because immigrants don’t tend to buy properties for the first two years after arriving in Canada.

“If the pandemic affects immigration for three years, it’s not going to be a problem,” he says. “If it’s just a year, year-and-a-half, it’s not going to be a problem.”

Canada’s reputation for being a stable presence in a chaotic world has also been strengthened by the country’s handling of the pandemic (and the humiliating failure of our neighbours to the south to do the same). Once recovered from COVID-19, the country should still offer the same opportunity for new arrivals to find not only a safe environment to raise their families, but high-paying jobs in growing industries like tech and financial services.

The only sub-market where Kyprianou sees prices softening is high-rise condos. But with so many investors having purchased rapidly appreciating pre-construction properties over the past five years, even those who may be forced to sell, like unlucky Airbnb operators, are unlikely to face a loss. If the average price per square foot in Toronto, for example, falls from its current level of approximately $1,100 to $900, anyone who purchased at $500 per square foot in 2015 will still be making a hefty profit.

“It’s not like there’s going to be a bloodbath,” Kyprianou says. “They just don’t make as much money if they have to sell.”

The Canadian real estate market is recovering much faster than anyone predicted. The average price of a Canadian resale home in June was $539,000, up from 6.5% the year before, according to the Canadian Real Estate Association. Home sales in June rebounded by a further 63% compared to May, which is also 150% above where they were in April when the housing market went into a deep freeze because of the coronavirus pandemic.

These numbers are heavily influenced by sales in Greater Vancouver and the Greater Toronto Area (GTA), two of Canada’s most active and expensive housing markets. July was a record-breaking month for Toronto real estate sales, as more than 11,000 homes changed hands. The Toronto Regional Real Estate Board says average home prices were also up 16.9% with low-rise homes, with properties outside the downtown core being most popular.

At the start of the pandemic, economists expected the recovery of the housing market to take about 18 months, but remarkably, within three months, it went from a complete shutdown to normal volumes again.

“The supply and demand imbalance remains and is driving prices higher,” said Will Granleese, director at Antrim Investments. “There is still a shortage of supply of real estate in major cities. The federal government is pursuing its high immigration policy, with 350,000 to 400,000 new immigrants a year and all those people are still coming. As a result, we are seeing a shortage of space.”

Granleese believes this quick recovery is a temporary supply and demand shock, fueled by record-low interest rates. While new listings are increasing as more time passes, demand never waned throughout the pandemic creating a buildup that pushed prices upward. As we move into the fall and the economy continues to reopen, there are several factors that could contribute to a leveling out in pricing.

“There will be more houses for sale, combined with the fact that many of the government assistance programs like CERB and bank deferral programs are ending. There will be people that will simply need to sell. The rapid rise right now is temporary,” he said.

Rental trends
What has been slightly less surprising is the decline in rental rates seen across cities like Toronto and Vancouver. In both cities, rents hit another record month of declines with Toronto one and two-bedroom prices down 8.3% and 5.3%, respectively compared to July last year, according to PadMapper. Meanwhile, Vancouver’s one-bedroom rent fell 5.9% and two-bedroom rent dropped 10.3% year-over-year. As work and leisure travel completely halted due to the pandemic, and a lot of short-term rental properties were left sitting empty, rental supply began to flood the market. Granleese says once universities reopen, some of that demand will return, but in the meantime, if some of these condos can’t be rented, there may be some buying opportunity heading into 2021.

“Signs are pointing toward a slight softening in the condo market,” says Granleese, as realtors are reporting an increased interest in more square footage. “Young families may choose to move out of the urban core, but I think that demand will eventually return for short-term rentals, foreign students, and young people still working in the core. I don’t see people turning the lights off in downtown condos.”

Going forward
Drastic changes are more likely on the commercial side, with retail and office space under a lot of pressure to transform, according to Granleese. Rather than major structural changes, he says residential developers may choose to market properties differently, turning nooks or small closets into home office spaces.

With rates sitting at where they are and concern around instability of the commercial real estate sector, another potential outcome is the residential real estate market becoming more attractive from an investment standpoint. Granleese says the residential market may be viewed as a safe haven.

“Our rates are lower than they’ve been in years,” said Granleese. “When the pandemic hit, there were a lot of lenders that restricted their guidelines and loan to values dropped dramatically. At Antrim Investments, that didn’t happen; we took a more bank-like approach and we were comfortable with the market.”

As for permanent or longer-lasting changes to the housing market, he says it’s just too early to tell.

“What I can say is we’re going to continue to see borrowers do everything they can to make their mortgage payments, and we’re going to continue to see low levels of mortgage default in Canada, because housing has never been more important.”

A series of commercial lots located east of Bayview and Finch avenues could be the future site of a 12-storey W-shaped condo development.

Last week, a Zoning Bylaw Amendment application was submitted to Toronto city planners to construct the angular condominium building at 630-696 Finch Avenue East. The builders behind the project, Tridel and BAZIS, have developed several residential projects across the Greater Toronto Area, including Exhibit Residences, 1 Yorkville and Tridel at The Well.

The 0.95-hectare development site sits on the northern side of Finch Avenue East, equidistant from Bayview Avenue and Leslie Street. The irregularly shaped lot consists of two municipal properties, which are occupied by a one-storey automotive building, surface parking areas and a two-storey shopping centre called Bayview Woods Plaza.

The condo development would house 206 residential suites, plus 9,655 square feet of non-residential gross floor area, 216 bicycle parking spots and 311 parking spaces in a three-level partially underground garage. Designed by Kirkor Architect + Planners, the building would be W-shaped with an angular design that responds to the topographic grade changes across the lot.

“The proposal adapts to this condition by concentrating the majority of the building mass within the centre of the site, while incorporating a series of terraces along its edges so as to provide a transition to the surrounding low-rise neighbourhoods,” explains the planning rationale, authored by Bousfields Inc.

A three-storey podium would support the base of the building structure. Five retail units with access onto Finch Avenue East are proposed for the ground floor and mezzanine levels, along with the residential lobby and garbage areas. Throughout floors two and three, residential units and screened parking areas would be added, while level four would feature indoor amenity rooms that extend onto outdoor amenity terraces, plus additional residential suites.

Floors five to 12 would contain the remainder of the units. In total, 35 one-bedroom, 150 two-bedroom and 21 three-bedroom suites would be included in the development. All units are provided with private balconies or terraces.

In the neighbourhood, sales continue at BT Modern Towns Bayview Village and Concord King’s Landing near Sheppard Avenue East.

Price growth in the Toronto region lost some steam last month compared to July, but there were still plenty of substantial price gains seen across the city’s suburban markets.

According to the latest data from the Toronto Regional Real Estate Board, 10 of the region’s suburban cities and towns saw home price increases of over 20 percent in August compared to the same period in 2019.

Scugog, Essa, Georgina, Brock and Mississauga made up the top five GTA markets with the highest price gains, all seeing year-over-year increases exceed 25 percent, with Scugog coming out on top with a 56.5 percent increase over August 2019.

Scugog’s average sale price in August was $910,848, up from $582,137 a year ago. The township to Toronto’s northeast was noteworthy for its home sales volume too, notching up 44 sales last month compared to just 30 a year prior. A result like this bolsters the argument that pent-up demand from the spring that’s currently elevating sales activity is concentrated in the region’s suburban markets where single-family homes dominate.

Essa, a township south of Barrie, and Georgina, a town in York Region, saw 32.4 percent and 28.7 percent average price increases, respectively. The former recorded an average sale price of $740,629 in August while the latter logged a $710,451 average price.

Brock and Mississauga, rounding out the top five, saw gains of 26 percent and 25.5 percent, respectively. The other five markets to see 20 percent-plus increases were Adjala-Tosorontio, Oakville, Innisfil, Pickering and Halton Hills.

Edgard Navarrete, an economist with Central 1 Credit Union, noted that home price appreciation in the Toronto region slowed somewhat in August from its pace in July as new supply hit the market.

But Diana Petramala and Victoria Colantonio, researchers at Ryerson University’s Centre for Urban Research, said today that the sluggishness was centred on the high-rise market in the City of Toronto. Meantime, suburban “905” markets had their best month for home sales activity since 1996.

Petramala and Colantonio said that Millennials, supported by ultra-low interest rates pushed down further by the pandemic, are taking this opportunity to move out of condos in the city and into ground-related housing in suburban markets.

When the COVID-19 pandemic and associated lockdown hit Ontario, some suggested the GTA’s white-hot housing market was going to take a hit.

Six months into the crisis, house prices in Mississauga and surrounding cities are up year-over-year, with the low-rise market experiencing significant price growth as residents flee from condos in search of larger yards and a little additional space.

The Toronto Regional Real Estate Board (TRREB) reported 10,775 home sales through its MLS system for August, up more than 40 per cent from 7,682 in the same month a year ago. Sales of detached homes rose 50.6 per cent and semi-detached houses climbed 66.8 per cent, while condo sales growth was slower, at 10.9 per cent.

The average price of a home sold in the region was $951,404, up more than 20 per cent from $792,134 a year ago.

“Between March and June … sellers took their homes off the market. A lot of people were afraid to have strangers walking through their homes,” says Michael Grant, a sales representative at Royal LePage Infinity.

“Around mid-July … all of a sudden it seemed that everyone had the same feeling: ‘Let’s jump into the market’.”

In spite of the record-setting sales in July and August, TRREB said year-to-date sales have not caught up to where they were this time last year, given how significant the drop in sales was during the spring. Only sales of detached homes have surpassed 2019 levels so far this year.

“Inside the city people are selling single-family homes, the low-rise models, the detached, the semi-detached, and they are moving out of the city,” says Charlene Williams, real estate broker at Real Estate Homeward Brokerage.

home sales were up 35 per cent year-over-year in the Region of Peel, with 2,301 homes sold in Mississauga, Brampton and Caledon.

Sadly for prospective buyers looking for a break, the average sold property price hit $897,391—a 20 per cent increase compared to last August. Since February, the last full month before COVID-19 emergency measures were implemented, the average home price rose 4 per cent.

Peel Region remained a sellers’ market this August.

As for Mississauga in particular, condo owners are having a little more difficulty offloading their units.

the total number of homes sold in Mississauga for August was up 22 per cent from last year, reaching a total of 950, there was a clear divergence in growth between freehold versus condo properties.

detached house sales were up 49 per cent year-over-year and the average price reached an all-time high of $1,307,832—a 23 per cent increase from last August.

Compared to last year, new listings increased 26 per cent to 586 properties but active listings were down 16 per cent, revealing a higher level of demand for this property type.

In contrast, condo apartment sales were down 11 per cent annually while new listings soared 77 per cent. The increased supply combined with reduced demand pushed the Mississauga condo apartment market near the threshold between a balanced market and a buyers’ market.

Despite the decrease in sales, the average condo apartment price increased by 13 per cent to $540,877 in August.

TRREB says the trend is apparent across the GTA, as condos are increasingly hitting the market as people move toward low-rise communities, “with growth in condominium apartment listings well-outstripping condo sales growth,” according to Jason Mercer, TRREB’s chief market analyst.

Board president Lisa Patel attributed part of the market’s overall sales growth in August to “improving economic conditions and “very low borrowing costs,” as mortgage rates remained low. Statistics Canada previously reported that almost 2.2 million Canadians were unemployed in July, nearly twice as many as in February, but unemployment levels were down from record highs.

“It’s mostly investors that are putting the condos on the market because they are not able to get renters. Tenants aren’t able to pay the rent … they are the ones that have lost their jobs,” says Williams.

Going into fall, market watchers are eyeing how mortgage deferral rates and the end of other government income supports will impact the real estate market, according to a separate report on interest rates released by Finder.com on Thursday.

Sri Thanabalasingam, senior economist at TD Bank, said a Finder.com’s report said that “a partial labour market recovery and ending mortgage deferrals could increase housing supply later this year, potentially putting downward pressure on prices.”

“People want to see what’s going to happen if the deferrals will have an impact on housing prices,” says Grant. “They are interested in holding off but they want that pre-approval, they want to lock-in that (mortgage) rate … They are able to afford more home with lower interest rates.”

Not everyone has a glum outlook: A survey of Remax brokers suggests that the average residential sale price in Canada could increase by 4.6 per cent through the rest of 2020, owing to Canadians looking to flee urban centres in search of more space.

“Predominantly in government, banking, insurance … the clients I’ve worked with just continued to work during the pandemic. There wasn’t any downtime or layoffs, they have just shifted to working from home,” says Grant.

“It’s kind of the haves versus the have-nots. There is not much middle ground in Toronto.”

Since late March, Canada’s real estate industry has seen extreme lows and highs in the span of just a few months.

Now, as the market prepares to enter another typically busy season, it’s difficult to pinpoint what new construction home developers, buyers and investors should be expecting from the fall.

“I think there’s still a lot of uncertainty going into the fall, and I think [residential] developers will be watching to see what’s happening before they necessarily put the foot on the gas pedal,” said Ralph Fox, broker of record and managing partner at Fox Marin Associates.

As the COVID-19 pandemic picked up steam in the late winter and spring months, the housing market and global economy was hurled into rough waters. Homebuyers paused their purchasing plans while many home builders chose to postpone their launches until later in the year.

Despite the turmoil, there have been a handful of pre-construction launch success stories — both Fox and Ben Myers, president and owner of Bullpen Research & Consulting Inc, point to 28 Eastern in Toronto as a case study, which kicked off pre-sales earlier this year.

Myers noted that some developers that watched these pandemic launch successes initially ramped up their advertising, but after consulting with their brokers, are still prepared to pull back at the last minute if their product fails to generate sufficient interest. Overall, Myers said that we could see an average fall performance.

“I still think it’s in flux. Most developers have not launched a COVID project so maybe they’re not used to non-face-to-face and all-virtual, and it may be a little bit new for them,” he explained. “So we’ll see. I think it’s hard to tell, but I don’t think it’s going to be anywhere near the fall that we experienced last year or in 2018.”

While developers may have lost some time due to lockdown-induced delays, Fox and Myers said that new construction pricing isn’t expected to change much. Myers pointed out that investors are likely to be more conservative and price-sensitive with their purchases, while developers can’t be expected to afford to push pricing. Fox said that buyers and investors may see developers roll out other incentives instead, such as more flexible deposit structures.

Home offices, outdoor space and the ability to safely socially distance have been reflected in the purchasing decisions of recent resale buyers, many of whom are now migrating outside of the city. In preconstruction, some of these purchasing trends may carry over — Fox estimated that investors will seek out units with balconies and place higher value on smaller buildings, while Myers sees GTA investors starting to venture outside of downtown Toronto in search of better deals.

“I think it is impacting where investors are going to look,” said Myers. “Maybe they’re going to look for value in other places and maybe they see that price appreciation may be higher in what we would have called B and even C locations in the past.”

While the impacts of the pandemic will reverberate for months to come, Fox explained that investors are trying to project what the world will be like a few years from now when they close on their new construction property.

“I think investors typically think long-term, and I think most of the investors who are looking at making these types of investments are trying to think of what life will be like and what the demand will be like in three, four, five, six years,” said Fox.

“But I do think there does seem to be a consensus in the real estate investment world that this whole COVID situation, as unfortunate as it is, won’t last forever,” he added.

The Toronto region recorded another month of over 10,000 home sales as buyers seeking low-rise properties made their move before the end of summer.

A total of 10,775 properties changed hands last month, up over 40 percent compared to August 2019, according to data released today by the Toronto Regional Real Estate Board (TRREB). The average home selling price also increased substantially relative to a year ago, up 20 percent to $951,404.

“Increased demand for ownership housing has been based on improving economic conditions, in terms of monthly GDP growth and job creation, and the continuation of very low borrowing costs,” said TRREB President Lisa Patel in a media release.

“In addition, fewer households have chosen to go on vacation as a result of COVID-19 and instead have remained in the GTA and been active in the housing market, satisfying pent-up demand from the spring,” she added.

While condo sales recorded a healthy 10.9 percent increase over the previous year, it was single-detached, semi-detached and townhomes that drove the majority of the sales growth recorded in August.

Detached home sales soared by 50.6 percent in the Toronto region, while semis saw a nearly 67 percent sales rise over the previous year. Townhome sales were up 45.8 percent over August 2019.

A similar dynamic played out on the pricing front, with the average sale price for a Toronto region condo rising a relatively modest 9.5 percent to $629,643.

By contrast, all low-rise property types on the regional level saw price growth between 16 percent and 20 percent over the previous year. Drilling down further, it was City of Toronto single-detached homes that saw the largest price increase last month, rising 21.4 percent to $1,505,100.

“Generally speaking, market conditions remained very tight in the GTA resale market in August. Competition between buyers was especially strong for low-rise home types, leading to robust annual rates of price growth,” said TRREB Chief Market Analyst Jason Mercer.

“However, with growth in condominium apartment listings well-outstripping condo sales growth, condo market conditions were comparatively more balanced, which was reflected in a slower pace of price growth in that segment,” he continued.

Looking ahead, market commentators have cautioned that the high-flying market performance seen this summer will likely cool as pent-up demand held over from the spring fades, government income support programs wind down and the threat of a second wave of COVID-19 infections weighs on homebuyer confidence.

Only five urban markets nationwide saw their condo values reach new heights in July, according to the Canadian Real Estate Association.

The strongest performer was Ottawa, with its 22% annual increase to a new peak of $369,200. Oakville posted the highest benchmark of the record-breakers at $600,600, despite having the smallest annual growth (10.2%) of these five markets.

Guelph ($375,300), Montreal ($316,100), and Niagara ($361,300) saw their highest-ever condo prices in July, as well.

The national benchmark condo price stood at $477,900 in July, representing 6.37% growth year over year and a slight 0.31% downturn from the peak reached in April 2020.

Traditional powerhouse condo markets such as Toronto and Vancouver experienced noticeable price declines at 1.4% (to $593,500) and 5.38% (to $682,500), respectively.

Condo price trends did not deter Toronto’s housing activity, however: Data from the Toronto Regional Real Estate Board showed that the Greater Toronto Area had 11,081 sales in July, up by 29.5% annually. New listings also increased by 24.7% during the same time frame.

“Normally we would see sales dip in July relative to June as more households take vacation, especially with children out of school,” said Lisa Patel, president of TRREB. “This year, however, was different with pent-up demand from the COVID-19-related lull in April and May being satisfied in the summer, as economic recovery takes firmer hold, including the Stage 3 re-opening. In addition, fewer people are travelling, which has likely translated into more transactions and listings.”

The summer months are typically a quieter time for Toronto’s new condo market, with project launches concentrated in the spring and fall months.

But when there’s no spring launch season to speak of thanks to a global pandemic, it turns out that you get a very busy July for new projects and units being brought to market.

Nine projects launched sales across the Toronto region, adding 2,539 condo units to the new home market, according to real estate data tracker Altus Group. The number of units launched represents the highest volume observed in the month of July since Altus Group began tracking the data in 2000. The project launch total is a near-record breaking result.

The data firm’s Ryan Wyse wrote in a blog post that the nine condo projects are reporting strong sales as buyers jump back into the market, encouraged by the easing of pandemic-related restrictions.

Although the activity seen in July was promising, Wyse said that year-to-date figures for project launches and condo units added to the market remain down significantly for 2020 compared to a year ago. Strength in July was not quite a perfect substitute for a busy spring market.

“However, with one-third of new July project launches occurring in the final days of the month, August is also expected to experience stronger than usual sales, resulting in a summer sales surge,” wrote Wyse.

A busy fall is also in the cards, according to Wyse, as builders are expected to continue to launch projects through the season to satisfy pent-up demand from homebuyers.

If one thing’s for certain, July was a scorcher in the Greater Toronto Area (GTA), and no, we’re not just referring to the weather. The new home market also experienced the strongest July for new home sales since 2007, as a total of 3,544 new properties were sold, according to data released by the Building Industry and Land Development Association (BILD).

According to market intelligence sourced from Altus Group, BILD’s official data partner, new homes sold in July were up 36% from the same time last year and 40% above the 10-year average.

New single-family homes continued to make strong sales gains in the GTA, with 1,553 properties sold last month. This marks a whopping 187% increase in new single-family home sales — including detached, linked, and semi-detached houses and townhouses — compared to the same month last year.

Compared to the 10-year-average, new single-family home sales were up 78% last month, marking the highest July since 2009.

f one thing’s for certain, July was a scorcher in the Greater Toronto Area (GTA), and no, we’re not just referring to the weather. The new home market also experienced the strongest July for new home sales since 2007, as a total of 3,544 new properties were sold, according to data released by the Building Industry and Land Development Association (BILD).

According to market intelligence sourced from Altus Group, BILD’s official data partner, new homes sold in July were up 36% from the same time last year and 40% above the 10-year average.

New single-family homes continued to make strong sales gains in the GTA, with 1,553 properties sold last month. This marks a whopping 187% increase in new single-family home sales — including detached, linked, and semi-detached houses and townhouses — compared to the same month last year.

Compared to the 10-year-average, new single-family home sales were up 78% last month, marking the highest July since 2009.

 

What’s more, the total new home remaining inventory — which includes units in preconstruction projects, in projects currently under construction, and in completed buildings — in July was 13,828 units.

“The strong demand for new homes we saw in July is heartening but not surprising,” said David Wilkes, BILD President & CEO.

“Even as our region makes its way through recovery, it continues to be a very desirable place to live and work. The provincial government, with its Housing Supply Action Plan, has put in place a number of changes to help address our generational housing supply shortage.”

Wilkes says it’s now time for municipalities to work with the industry to “implement these changes for the benefit of the families who want to call GTA home and as a much-needed boost for our economy.”

While Mississauga commuters might be a little disappointed to hear that there are no plans to extend the TTC subway system to Square One, they might be happy to hear that plans to extend the Eglinton Crosstown Light Rail Transit project to Pearson Airport in Mississauga are still underway.

On Aug. 19, Ontario Premier Doug Ford appeared in Mississauga to announce that the government is releasing a Request for Proposals (RFP) to advance tunnelling work on the Eglinton Crosstown West Extension (ECWE).

The ECWE will extend the Eglinton Crosstown LRT, currently under construction, by 9.2 km from the future Mount Dennis Station to Renforth Drive. The province says the extension will create connections between different transit systems throughout the region.

It will provide connections to the UP Express and Kitchener Line GO train service at Mount Dennis, TTC bus services at transit stops in Toronto, and MiWay and GO bus services via the Mississauga Transitway at Renforth Drive.

The Renforth Station, located in Mississauga, is the most eastern terminus of the 18-kilometre Mississauga Transitway, a dedicated bus corridor with 12 stations. The Transitway, which runs east to west, begins at Winston Churchill Boulevard and ends at Renforth Drive.

The province said it’s also still committed to establishing a connection to Pearson International Airport, which is technically located in Mississauga.

The project has a preliminary cost estimate of $4.7 billion and is estimated to support as many as 4,600 jobs annually during the six-year construction period.

The province estimates that the ECWE project will bring 31,000 jobs within a 10-minute walk to a station and attract 37,000 daily boardings by 2041.

“Today marks another step forward in delivering modern underground rapid transit to connect people from across Toronto and Mississauga to one of the country’s largest employment centres,” said Ford in a statement.

“Working with our partners, we will reduce travel times for riders and get more vehicles off our roads, so people can spend more time with their families.”

On Aug. 20, 2020, the province will invite the selected teams from the Request for Qualifications (RFQ) process to respond to an RFP that details how they plan to design and deliver the tunnelling work for the ECWE.

Infrastructure Ontario (IO) and Metrolinx expect to award this tunnelling contract in mid-2021.

The Greater Toronto Airports Authority (GTAA) first announced plans to partner with Metrolinx to extend the Eglinton Crosstown West LRT from Renforth to Toronto Pearson Airport in late 2019.

While the Eglinton Crosstown West project is a light rail transit project, the province says there are plans to build it (or part of it) underground, hence many are referring to it as a subway.

The plan is part and parcel of a plan to turn Pearson into a major transit hub dubbed Union Station West.

The province says that to expedite work on the extension, tunnelling will begin first, followed by separate contracts for the balance of the work.

On Aug. 5, 2020, Ontario announced three teams of bidders per project were shortlisted to advance tunnelling work on the ECWE and the Scarborough Subway Extension.

The province plans to spend $28.5 billion on transit projects, with the funding directed towards the ECWE, the Scarborough extension, new Ontario Line and the Yonge North Subway Extension.

At the press conference, Ford asked the federal government to commit to helping to fund the major transit projects.

“I want to thank the province for advancing the important work needed to extend and connect the Eglinton Crosstown to Renforth Station,” said Mayor Bonnie Crombie in a statement.

“Once complete, this will serve as Mississauga’s newest east to west regional transit link and fully connect our transit system to Toronto and the GTA. It will allow for more frequent and rapid service to the Airport Corporate Centre and, eventually, Pearson Airport, which will one day be Mississauga’s Union Station West.”

If I were asked to compile a list, “Why is Toronto real estate so bananas?” has joined his buddies, “So, what are you thinking about school in September?” and “Who’s idea was it to open bars, anyway?” as my most prominently featured conversations of this pandemic summer.

While I have no clue where to even begin to answer the second two questions, the subject of Toronto real estate in the time of COVID-19 continues to be endlessly fascinating.

To quickly recap, when the pandemic lockdown first set in, I, along with pretty much all of my industry colleagues, braced for impact.

Following a record-breaking February and first half of March, April was a complete bloodbath. Houses that would have sold in multiple offers just days earlier suddenly sat, prices fell, the industry shut down.

Buyers were at home.

People were rattled, presumably by the economic fallout that was to come from these “unprecedented times,” and the market was frozen.

But then it woke back up again. And woke back up, it did.

This has been, by all accounts, the busiest summer on record. The average price of a home in Toronto is now closer than it’s ever been to $1,000,000.

Yes, $1,000,000.

And that is in the middle of a global pandemic with credible fears of a second wave to come.

And a suburban and rural exodus from Toronto driving outer markets to record levels.

Maybe it’s the pent-up demand from the spring market that never came, or possibly the fact that most people aren’t travelling this year, or maybe even the five months of social distancing that likely changed our perspectives on our living situations.

And it’s not that people are oblivious to the potential economic fallout of COVID-19 — it’s more that buyers appear confident that Toronto is a sound investment. Whatever comes next, in the mid-to-long-term, even a 2008-style crash will really just be a blip.

So, what’s important to know?

Mortgage rates are now sub-2% in some cases. Money is essentially free.

Even with record unemployment, those who worked through the shutdown are either back in the office at least partially, or have pivoted to a work-from-home model, so people feel mostly secure.

The looming “deferral cliff” that has been so widely anticipated in the face of mortgage deferral programs ending in September is seeming like it probably won’t be the crisis we originally feared, in Toronto at least.

Do we know that the people who opted-in to payment holidays from their mortgage did so out of necessity? Or is it just as likely that many, in the face of the unknown, took advantage of deferral programs just in case.

For those who do need it, between CMHC declaring their intention to explore other options to help borrowers such as extending the program, lengthening amortization periods, and working on special repayment arrangements, and the fact that even the most doomsday forecasted correction won’t leave people upside down on their mortgage, the worst case scenario isn’t likely to pass.

So, as the summer that has been unlike any summer before starts to wind down, it will be interesting to see what happens post-Labour Day. Barring some dramatic turn of events like another lockdown, it doesn’t seem likely that the conversations will change.

Medical waivers. Masks. Virtual showings. Seven-figure purchases, sight unseen.

Home buying and selling has seen a head-snapping shift during the COVID-19 era, as both parties deal with the demands of physical distancing, virtual showings and previously unheard-of safety considerations.

One thing that hasn’t changed is the competition: Most major Canadian markets are as buoyant as ever after a brief slump and in defiance of gloomy forecasts about the impact the pandemic could have on real estate activity.

But the nuts and bolts of the process – how buyers and sellers interact and how realtors work with both – looks dramatically different than it did a few months ago, forcing years’ worth of sales innovation into just a few months.

Here are a few of the biggest changes:

Say goodbye to open houses
So much for perusing open houses as a weekend pastime. Physical distancing brought group showings to an abrupt halt this spring. As restrictions eased nationwide, open houses slowly started up again. In Ontario, for example, the province lifted its prohibition in most areas on July 17 as part of its Stage 3 reopening.

Still, open houses are nowhere near as common as they once were. Sellers remain wary of inviting large groups of people to traipse through their homes and some renters’ groups have spoken out against them as well.

“Before you could have upwards of two or three different agents with groups, at any given time, showing the same property,” says Darren Josephs, a Toronto Re/Max agent. “Now, the windows are 15-to-30 minutes and no overlap.”

Also, each client goes through individually, following sanitizing protocols before and after each visit. And there’s no such thing as dropping in with a moment’s notice, Mr. Josephs says.

“I think a lot of people were never entirely comfortable with open houses, especially sellers,” he says. “I think we’ll see a real long-term effect from this and more qualified showings, which tend to weed out people who aren’t serious.”

Vancouver-based independent realtor Chris Strand says there’s a “split in the realtor community” on the issue. He points out that realtors can often pick up new clients at open houses. However, he agrees that a decline in open houses – at least as we once knew them – may be one of the biggest long-term changes to emerge from the pandemic.

Better digital sales tools
The era of out-of-focus photos and sparse online listings is over, according to Patti Ross, a Royal LePage realtor in Halifax.

“You’ve always seen listings and asked, ‘Why are the photos so bad?’” she says. “We were proactive in my brokerage years ago in stepping up online marketing and building a photography and video department and it’s really paying off now.”

Realtors have also long been limited in the number of photographs they can use on listings but, from coast-to-coast, those limits have been bumped up, allowing potential buyers to get a better sense of a property before arranging a viewing.

“Our real estate board just upped our photo count from 20 to 40,” Mr. Strand says, “and we’re seeing more people hiring professional videographers and using virtual walk-through tools.”

Sometimes that means 360-degree photos tours and, for high-end properties, it can mean full-blown immersive 3D renders of a property’s interior. That can help drive more selective, qualified showings, and fewer potential buyers arranging a viewing out of curiosity, only to show up and quickly realize the property isn’t right for them.

More safety protocols
When in-person viewings do take place, safety has become a top priority. In most cases, realtors will go into homes in advance, opening every door, cabinet and cupboard for clients.

“We ask that visitors treat the house like a museum,” Mr. Josephs says. “No touching.”

Potential buyers sign waivers attesting to their lack of COVID-19 symptoms and international travel. And everyone – buyers, sellers and agents – wear masks and keep the mandated two-metre distance.

Even Ms. Ross’ photographers and videographers make sure their gear is sanitized before it enters a property and they clean it thoroughly once they leave.

Some realtors hope that better safety protocols can instill more confidence in sellers to list their homes.

Major markets nationwide are currently grappling with a serious imbalance between supply and demand, as buyers return to the market in droves, but sellers remain shy. ”

You definitely see people waiting or holding off on listing,” Ms. Ross says. “But once you talk to people and tell them about process, they feel better.”

More risk-taking
That imbalance between buyers and sellers has also made markets more competitive. In Halifax, Ms. Ross recently sold one suburban property listed at $229,000 for $55,000 over asking, after entertaining more than 30 offers. In Vancouver, Mr. Strand is seeing similar activity, as is Mr. Josephs in Toronto, where he recently sold one home for $350,000 over asking, after 26 offers.

More buyers are also signing off on purchases remotely. In June, Nanos Research conducted a poll for the Ontario Real Estate Association that revealed 42 per cent of buyers were open to buying a home even if they could only see it online beforehand.

Ms. Ross says she’s noticed more buyers willing to purchase places sight unseen. (Atlantic Canada’s current self-isolation restrictions for out-of-region travellers mean visiting the region to house-hunt is especially impractical).

“We’re doing virtual tours that allow people to shop from Ontario or Vancouver,” she says, “and walk through the house remotely.”

She’s also begun doing walk-through video tours of neighbourhoods. A video tour showcasing sports facilities and outdoor trails near one property recently helped seal the deal with one out-of-province family.

Mr. Strand is seeing the same kind of activity in Vancouver.

“We’re using FaceTime, and I’ve had potential buyers from Ontario, Alberta, and several from Hong Kong,” he says.

Mr. Strand says some of that activity may be due to the current bull market in housing. But most industry watchers, including major banks and the Canadian Mortgage and Housing Corporation, are still forecasting at least a modest decline in home prices over the coming year. As sellers re-enter the market, spiralling prices may well simmer down – good news for buyers already struggling with deteriorating affordability.

But even if markets re-balance, there seems little doubt that COVID-19 will result in lasting changes to the way Canadians buy and sell homes.

“Anything could happen in the next few months,” Mr. Strand says. “We’re all just waiting to see what sticks as we keep going through this and what goes back to the way it was before.”

Canadian home sales surged to a record in July as homebuyers emerged from lockdowns.

Transactions for existing properties reached 62,355 in the month, up 26% from a month earlier, the Canadian Real Estate Association reported. Benchmark prices were 2.3% higher on the month, as pent-up demand for homes collided with extremely low inventory levels.

“A big part of what we’re seeing right now is the snap back in activity that would have otherwise happened earlier this year,” Shaun Cathcart, CREA senior economist, said in a statement.

Canada’s economy is emerging the steepest downturn since the Great Depression, fueling a renewed housing boom. Housing starts hit a two-year high last month, while the latest confidence readings show optimism about prices is rebounding.

In Toronto, the country’s largest market, sales of existing properties jumped 50% in July compared to June, and were up 29% with the same month a year ago, CREA reported. Vancouver sales increased 44% on the month and 24% from July 2019. Average prices in Toronto were 5.5% higher on the month, and up 1.5% in Vancouver.

There were just 2.8 months of inventory nationwide, the lowest level on record, CREA said.

Average prices were 9.4% higher nationwide on the month.

The Greater Toronto Area neighbourhoods that saw the greatest price growth so far this year had a detached housing average value of $2.9 million, according to RE/MAX.

In its recent analysis, RE/MAX said that the localities of Annex, Yonge-St. Clair, Casa Loma, and Wychwood had a 25.7% annual increase in detached housing prices during the first half of the year.

“The areas of Yonge-St. Clair and Wychwood were recognized as being two of the top neighbourhoods to buy real estate in 2020 due to their value and the momentum of price growth,” Toronto Storeys said in its report on the RE/MAX study.

The next strongest year-over-year price growth was 18.4%, seen in the Birchcliffe-Cliffside and Oakridge areas (average prices up to around $1.1 million), as well as the High Park, Roncesvalles, Swansea, and South Parkdale areas (up to around $2.1 million).

The findings supported observations that the COVID-19 pandemic had only a relatively minute impact on activity and price growth in one of Canada’s hottest housing markets.

Data from the Toronto Regional Real Estate Board indicated that the average home sales price in the GTA went up by 16.9% annually in July to reach $943,710. The most significant growth was observed in the low-rise housing segment, especially within the City of Toronto.

“Competition between buyers continued to increase in many segments of the GTA ownership housing market in July, which fuelled a further acceleration in year-over-year price growth in July compared to June,” said Jason Mercer, chief market analyst at TRREB.

Sales activity also intensified by 29.5% compared to July 2019, for a total of 11,081 residential transactions across the GTA.

A large commercial lot near a major Etobicoke intersection could be the future site of a high-rise residential complex.

Last week, a rezoning application was submitted to city planners to develop a set of mixed-use towers containing 1,210 residential units at 1325 The Queensway. Each rising 37 storeys, the two structures would be built on top of a six-storey podium base and supported by an 11-storey mid-rise portion, which would house an internal courtyard, daycare facilities and retail space.

The square, 0.86-hectare site is located on the southwest corner of Kipling Avenue and The Queensway, fronting onto The Queensway. A two-storey Hakim Optical store and a single-storey auto repair shop currently occupy the lot, with surface parking interspersed throughout.

Spanning over 900,000 square feet of total gross floor area, the property would be broken up into two phases, according to the architectural drawings, the first of which would focus on the eastern tower.

“The towers were situated at the rear of the site to provide The Queensway with an appropriately scaled mid-rise building that reflects an evolving urban corridor while also fostering a comfortable pedestrian experience,” explains the planning rationale, prepared by Bousfields Inc.

On the exterior of the mid-rise portion, balconies and vertical projecting elements would be included to break up the facade. Fronting The Queensway, the ground floor would contain 7,567 square feet of retail space in the northwest corner of the building, alongside 2,949 square feet of resident amenity space. A 7,190-square-foot private daycare centre would be situated in the northeast corner.

A separate, publicly-owned daycare facility covering 5,672 square feet would also be included. Together, both daycares would provide 134 childcare spaces and each would feature an attached outdoor play space, totaling 4,628 square feet.

A 10,408-square-foot central courtyard would occupy the second floor, a third of which would be reserved as an outdoor amenity area. Landscaping, seating and canopies would be implemented, with private terraces and balconies from the podium and mid-rise buildings overlooking the courtyard.

At the rear of the site, towers one and two rest atop a six-storey podium, which would provide indoor amenity space and garbage collection rooms. On the seventh floor, a large outdoor amenity area encompassing 9,213 square feet would connect the two vertical structures.

Residential units would be dispersed from the second to the 37th floors throughout the tower, podium and mid-rise building. The collection of 1,210 suites would provide 28 studios, 803 one-bedroom, 256 two-bedroom and 123 three-bedroom units. A five-storey underground parking garage would offer 1,064 vehicle spaces, alongside 903 bicycle spots, 85 of which would be located on the ground floor.

The Canadian home building rebound only gained momentum in July with housing starts rising to an annualized rate of 245,600 units, the highest level recorded in two-and-a-half years.

This result, released today, exceeded expert predictions by a wide margin, as single-family home construction surged across the country while Toronto and Vancouver saw a strong uptick in condo building.

In a research note published earlier today, BMO Economist Priscilla Thiagamoorthy said builders are unlikely to be “packing away those hammers anytime soon” as low interest rates and strong demand will ensure home construction remains robust for the rest of the year.

Looking further ahead, Thiagamoorthy said that home building activity will hinge on the strength of population growth, which is currently taking a hit due to pandemic-induced national immigration restrictions.

The jury is still out on the pandemic’s long-term effects on population growth and, by extension, home building. But, most market observers agree that new home construction has stayed remarkably resilient throughout the volatile year.

RBC Economist Claire Fan noted that national housing starts in 2020 thus far have put up numbers comparable to levels seen through the previous year, even as building activity was curtailed by pandemic measures introduced during spring’s first half. July’s strong performance, which saw housing starts rise 11 percent over the same time last year, was a major contributor in making up for activity lost during the spring.

While the industry is unlikely to be totally impervious to the pandemic’s ill-effects, TD Economist Omar Abdelrahman said the impact on home building so far has been relatively slight.

“[A]side from the complete pause in Quebec in April due to restrictions on non-essential economic activity, homebuilding has shown only a muted response to COVID-19, swiftly returning to pre-pandemic levels. This stands in contrast with more severe declines and more drawn-out recoveries seen in other industries,” he wrote.

Canadian mortgage rates are in a virtual free fall, dropping to record-setting lows with discount brokers now offering one- to five-year variable rates in the 1.64 to 1.68% range.

But the nearly free money arrives as Canadian mortgage debt is exploding and lenders are dealing with a rush of mortgage payment deferrals due to the COVID-19 pandemic.

The Bank of Canada reports that mortgage credit hit a record high in May, at $1.68 trillion, up 0.6% from April and 6% higher than in May 2019.

Mortgage deferrals, meanwhile, are also soaring. Deferrals topped 743,000 in May at Canada’s six major lenders alone.

At the start of the pandemic, the big six banks—RBC, TD, BMO, Scotiabank, CIBC, and National Bank—announced they would allow customers to defer paying their mortgage for up to six months.

According to the Canadian Bankers Association, deferrals now account for 15% of the mortgages provided at its 13 member banks, which include all the majors.

Most of the deferrals are in Quebec, at 27%, and Alberta, at 26%. Ontario accounted for 21% of mortgage deferrals, with B.C. at just 7%.

With new mortgage applications faltering, lenders have slashed lending rates.

HSBC Canada led the trend early in June when it announced a five-year fixed default-insured mortgage for 1.99%—the lowest rate ever for a five-year fixed at the time. Days later, multiple brokers were offering five-year fixed rates starting at 1.98% and even lower in some cases, with restrictive conditions.

The lowest fixed mortgage rate available as of July 2, according to rate comparison website RateSpy.com, was the one-year fixed at 1.69% for those putting down less than 20% for insured mortgages.

Even the 10-year fixed rate is reaching new lows, currently available nationally for as low as 2.84%.

“Fixed rates are dirt cheap because funding costs keep sliding,” RateSpy founder Rob McLister said. “With a bearish economic report or two, we could slide further into uncharted depths, as soon as next month.”

The lowest nationally available variable floating rate is currently 1.95%, which is prime minus 0.5%, although certain discount brokers are offering rates as low as 1.69% for default-insured mortgages.

As of July 2, intelliMortgage and Butler Mortgage, both based in Ontario, posted a 1.64% rate for one-year fixed-rate products, and a similar record low of 1.68% for their five-year variable-rate offerings.

“Canadians can expect fixed and variable rates to stay at their current historic low until the Canadian and world economy is close to fully recovered,” Ratehub.ca co-founder and CanWise Financial president James Laird said.

The Bank of Canada overnight lending rate remains at 0.25%, and the central bank has hinted it will not go lower.

Average rent prices for both one-bedroom and two-bedroom condos fell during the second quarter of 2020 as rental listings increased and demand fell.

According to new data published last week by the Toronto Regional Real Estate Board (TRREB), the average price for a one-bedroom condo in the GTA was $2,083, down 5 percent from the same period a year earlier. The rent price for a two-bedroom condo also fell over 5 percent to $2,713.

As the second quarter results were announced, TRREB President Lisa Patel pointed to two major takeaways from the data.

“First, COVID-19 clearly impacted the demand for rental condominium apartments, due to restrictions on showing units and job losses across many sectors of the economy,” Patel said in a media release.

“Second, we saw the continuation of the pattern experienced over the past year, with year-over-year growth in rental listings far outstripping growth in rental transactions, resulting in a much better-supplied market and a moderating pace of rent growth,” she continued.

There were 7,320 condos rented through TRREB’s MLS system during the April to June period, down nearly 25 percent compared to the same time last year. As Patel noted, listings rose significantly — up 42 percent — during the second quarter, leading to a supply and demand mismatch.

The Toronto region has long grappled with a painfully low rental vacancy rate, viewed by experts as a symptom of a chronic rental supply shortage that’s been called “the worst rental supply deficit in Canada.”

In response to the new data, TRREB Chief Market Analyst Jason Mercer said that the second quarter increase in listings is part of a “consistent trend toward balance in the GTA condominium apartment rental market over the past year-and-a-half.”

“Accelerating growth in rental listings were at the root of this trend, but the COVID-19-related drop-off in rental transactions had a marked impact as well. Increased choice led to more negotiating power for renters, resulting in year-over-year declines in average rents in the second quarter of 2020,” Mercer said.

Prime Interest rates have gone down for 1.5% this means (see below chart)

For example $700,000 condo fully financed mortgage from $ 3,308.85 went down to $ 2,743.19 = $565 /Month

Translation: about $80 lesser mortgage payment (P&I) for any $100,000 mortgage !

click here for more information 

During heavy rain, the sewers can become overloaded. It is essential that homeowners take appropriate action to reduce the risk of basement flooding.

The City offers owners of single-family, duplex and triplex residential homes a subsidy of up to $3,400 per property to install flood protection devices. Eligible work includes:

  • Installation of a backwater valve.
  • Installation of a sump pump.
  • Severance and capping of a home’s storm sewer or external weeping tile connection.

Disconnecting the downspouts from your property’s eavestrough system is not eligible for a subsidy.

Eligible Work

Backwater valve

  • Installation or replacement of backwater valve.
  • Installation of alarm for backwater valve.

The available subsidy is 80 per cent of the invoiced cost up to a maximum of $1,250 regardless of the number of devices installed at the property, including eligible labour, materials, permit and taxes.

A Building Permit is required to install a backwater valve. The valve must pass inspection by the City of Toronto building inspector, in order to be eligible for the subsidy.

You must also consent at the time of the building inspection or at the request of the City:

  • To provide City access to the backwater valve to verify that installation has been completed in accordance with the requirements and conditions of the Program.
  • To the City taking photographs, video and digital images of backwater valves.

See what backwater valves look like and how they work.

Sump pump

  • Installation or replacement of sump pump.
  • Installation of alarm for sump pump.
  • Installation of back-up power for sump pump.

The available subsidy is 80 per cent of the invoiced cost up to a maximum of $1,750 regardless of the number of devices installed at the property, including eligible labour, materials and taxes.

Note: Be sure to maintain basement flooding protection devices according to manufacturer instructions. Keeping these devices in good working order is an important step in protecting your home against basement flooding. See what sump pumps look like and how and they work.

Foundation drain (weeping tile) pipe severance and capping

  • Disconnection of foundation drains (weeping tiles) from the City’s sewer system by severing and capping the underground sewer connection.

The available subsidy is 80 per cent of the invoiced cost up to a maximum of $400 including eligible labour, materials and taxes.

 

Subsidy Conditions

  • You must be the registered owner of a single-family residential, duplex or triplex property within the City of Toronto.
  • The property must not have exceeded the lifetime maximum subsidy amount for each eligible installation.
  • The subsidy is available only to existing homes, not homes in the planning stages or under construction
  • The downspouts from the property’s eavestrough must be disconnected from the City’s sewer system or you must have applied to the City for an exemption.
  • All front yard paved areas of the property, including parking pads, must comply with the City’s Zoning By-law requirements.
  • You must submit your application within one year of completion of the installation of the flood protection device.
  • Your contractor(s) and any sub-contractor(s) who performed the installation of flood prevention device(s) must possess a valid license from the City of Toronto for the installation work, at the time of installation.
  • Original invoices from the licensed contractor(s) and any sub-contractor(s) who performed the installation of the flood prevention device(s) must be provided with your application.
  • You must not have any outstanding taxes or debts owed to the City of Toronto at the time your application is processed.
  • Submitting an application does not guarantee a subsidy. Subsidies are issued on a “first-come, first-serve” basis, and are subject to annual funding approved by City Council.

How to Apply

Download the Basement Flooding Protection Subsidy Program application form.

Applying for the installation of a backwater valve and sump pump

  • You will need a Building Permit to install a backwater valve, which will be inspected by Toronto Building staff once it is installed.
  • If installing a backwater valve and sump pump, please complete and sign the Consent to Enter Form and include it with your Permit application. It will authorize Toronto Building staff to inspect and verify that both the backwater valve and sump pump have been installed according to Program requirements.
  • Installing the flood protection device(s) according to Program requirements is an important part of ensuring your eligibility for the subsidy.

For backwater valve installation, start at step 1 and for all other eligible work, start at step 3

  • Obtain a permit from Toronto Building. If installing a backwater valve and sump pump, please attach the Consent to Enter Form PDF to your permit application. Permits can be obtained from Customer Service Counters.
  • Request an inspection once installation is complete. Toronto Building staff must inspect the installation of all backwater valves. Do not enclose or cover the valve before this occurs. This inspector must be able to confirm whether the installation meets the applicable Building Code requirements.
  • Complete the Basement Flooding Protection Subsidy Program application form PDF.
  • Include original invoice(s) with your application. Invoice(s) must show an itemized cost breakdown of all work applicable to this subsidy and must be clearly marked “paid in full.” If your contractor uses a licensed sub-contractor, please also include original invoices from the sub-contractor.
  • Mail the completed application form with the required documentation to:
    Basement Flooding Protection Subsidy Program
    City of Toronto
    PO Box 15266 STN B RM B
    Toronto, ON M7Y 2W1
  • City staff will review your application and determine whether you are eligible for a subsidy. If your application is incomplete or you have not included the proper documentation, it will not be processed and all documents will be returned to you. If your application is denied, you will be notified by mail.

Selecting a Contractor

Homeowners are strongly encouraged to conduct due diligence before hiring a contractor. It is recommended you obtain a minimum of two quotes as well as references before hiring a City of Toronto licensed contractor.

Before work starts, verify that your contractor has a valid City of Toronto business license using the Business Licence Lookup tool or by phoning 416-392-6700.

If your contractor does not have a valid City of Toronto license, you will be denied funding for the work completed.

Different types of contractors are licensed to perform different types of eligible work:

Protecting Flood Prevention Devices & Your Basement

To keep your flood prevention devices in good working order, it is essential to maintain them according to the manufacturer’s directions.

When installing a backwater valve, consider including an alarm, so that you know when the device is activated. When your backwater valve is activated, it works to keep sewer water from backing up into your basement, but it also keeps wastewater from your home from flowing to the sewer. When your backwater valve is activated, any water sent down the drain (through toilets, sinks laundry etc.), may end up in your basement.

As rainstorms and power outages can accompany one another, you may also want to consider battery-power back-up for your sump pump.

New single-family homes sold by developers across the Toronto region in June beat new condo units sold during the same period by a wide margin.

Last month’s data, published today by the Building Industry and Land Development Association (BILD), signals that the market for new detached and semi-detached homes and townhouses is recovering faster than new condos.

There were 1,160 new single-family homes sold in June, the best result for the month since 2016 despite it being 12 percent below the 10-year average.

BILD’s data partner, Altus Group, said that during the same period, 744 new condo units were sold, down 73 percent from June 2019 and 70 percent below the 10-year average for the month.

“Single-family demand recovered more quickly as buyers returned and new supply started to come back into the market,” said Altus Group Vice President Matthew Boukall, in a media release.

“Given the challenges around COVID-19 restrictions, we’ve seen developers adopt new strategies to reach consumers and have seen success in the lower density segments,” he added.

The total number of new homes sold in June, at 1,904, was down 43 percent over the previous year. BILD was quick to point out, however, that the monthly total was a major improvement from May and April’s results. Both months were severely affected by restrictions in place to combat the spread of COVID-19 and saw new home sales totals well below 1,000.

“The June new home sales numbers are encouraging, though much remains to be seen as the GTA re-opens and begins recovery,” said BILD President David Wilkes.

“Now is the time to implement what we learned about facilitating the delivery of housing during the pandemic, to address our long-standing housing supply and affordability challenge while stimulating the local economy. Our industry is working with all three levels of government to help achieve these goals,” he continued.

Even with the ongoing slowdown in new condo sales, prices remained resilient. According to BILD and Altus Group, the benchmark price for a new condo was $999,228 in June, up nearly 25 percent from the previous year. The benchmark price for new single-family homes also saw an annual increase, rising nearly 4 percent to $1,141,848 in June.

As for the relative weakness of the new condo market, there are several explanations that are likely all contributing to the sluggish sales numbers.

For one, new condo sales rely more heavily on property investors who are reluctant to jump into the market with such an uncertain economic outlook prevailing. There is now emerging data-backed evidence that some investor-owners in downtown Toronto condos are beginning to sell their investment units. It is unclear how widespread this is and whether it will last through the fall, but it surely had an impact on the June sales numbers.

Secondly, there are simply far fewer new condo projects being brought to market by home builders. The spring months, which typically see the highest volume of new condo launches, saw only six projects hit the market this year. This pales in comparison to the 40 projects brought to market in the Toronto region during the same time in 2019.

Finally, there is a similar trend being observed in the resale housing market. Condo resales in the City of Toronto saw a 21 percent decline over the previous year in June while the region as a whole only saw a 1.4 percent decline in overall home resales. Meanwhile, sales for detached homes and townhomes in the Toronto region’s suburban markets saw a 10 percent year-over-year increase.

Following two months of “historically slow” sales as a direct result of the COVID-19 pandemic, new home sales are starting to surge again in the Greater Toronto Area (GTA).

In fact, during the month of June, sales of new single-family homes – which includes detached, linked, and semi-detached houses and townhouses (excluding stacked townhouses) – accounted for 1,160 of the total of 1,904 new homes sold. This marks the highest number of transactions for June since 2016, according to a new report from the Building Industry and Land Development Association (BILD).

However, while still a notable milestone, this is 12% below the 10-year average, according to Altus Group, BILD’s official source for new home market intelligence.

Sales numbers for new condominium apartments – including units in low, medium and high-rise buildings, stacked townhouses, and loft units – accounted for 744 units sold, which is up compared to April and May, but still down 73% from June 2019, and 70% below the 10-year average.

“Single-family demand recovered more quickly as buyers returned and new supply started to come back into the market,” said Matthew Boukall, Altus Group’s Vice President, Data Solutions. “Given the challenges around COVID-19 restrictions, we’ve seen developers adopt new strategies to reach consumers and have seen success in the lower density segments.”

The BILD report says that with several projects launching in June, the total remaining new home inventory increased slightly from the previous month to 13,863 units —this includes units in preconstruction projects, projects currently under construction, and in completed buildings.

What’s more, the benchmark prices for both new condominium apartments and new single-family homes increased last month compared to May. The benchmark price for new condo apartments was $999,228, up 24.2% over the last 12 months, while the benchmark price for new single-family homes was $1,141,848, up 3.9% over the last 12 months.

When breaking it down by municipality, Toronto had the highest number of new condominium apartment sales, with 408 transactions in June. Peel followed behind with 134, while York had 107 sales, Halton had 70, and Durham had just 25.

As for new single-family homes, York leads the pack with 451 sales, followed by Durham (277), Halton (274), Peel (152), and then Toronto with just six sales.

This could be an example of how more homeowners are beginning to flee the downtown core and turning to the 905 regions and surrounding areas in the search for more space and affordability.

David Wilkes, BILD President and CEO, said the June new home sales numbers are promising, though, much remains to be seen as the GTA re-opens and begins recovery.

“Now is the time to implement what we learned about facilitating the delivery of housing during the pandemic, to address our long-standing housing supply and affordability challenge while stimulating the local economy. Our industry is working with all three levels of government to help achieve these goals,” added Wilkes.

Average rent prices for condos and apartments in Toronto have been consistently declining thanks to the effects of the COVID-19 pandemic, and a new report suggests that trend is ongoing in many of the city’s neighbourhoods.

According to the Toronto GTA July Rent Report 2020 from TorontoRentals.com and Bullpen Research & Consulting, the average rent for all property types (singles, semis, row, condo apartment, rental apartment, basement apartment) in the former City of Toronto (pre-amalgamation boundaries) is down 8 per cent year over year.

“When looking at data on the average rent for all property types in the Greater Toronto Area, the market continues to experience a decline,” said Ben Meyers, president and owner of Bullpen Research & Consulting Inc., in a statement.

“However, when breaking down the data by property type, municipality, neighbourhood, and project, conflicting results arise.”

The report indicates that asking rents for single-family, townhouse and basement apartment listings on TorontoRentals.com actually increased from the first quarter to the second.

But, unsurpisingly at this point, condominium apartments for rent in the former City of Toronto, also known as Old Toronto, were nearly $260 cheaper per month in the second quarter of 2020 compared to the same period last year.

And when looking at the average rent for condominium and rental apartments in the 10 neighbourhoods in Old Toronto for Q2, rent declines are fairly consistent across the board.

In The Annex, for example, the average rent for condominium and rental apartments in Q2 was $2,559, compared to $2,606 in Q1 and $2,857 in Q2 of 2019.

In the Bay Street Corridor, the average rent was $2,448. This marks a 10 per cent decline from Q2 in 2019, when the average rent was $2,710, and it’s also down from Q1 in 2020 when the average price was $2,684.

Seven of the eight remaining Old Toronto neighbourhoods also experienced annual declines in Q2, including:

  • Waterfront Communities-The Island ($2,427, down 10 per cent)
  • Niagara ($2,302, down 8 per cent)
  • Church-Yonge corridor ($2,296, down 8 per cent)
  • Little Portugal ($2,218, down 11 per cent)
  • Mount Pleasant West ($2,144, down 8 per cent)
  • Moss Park ($2,098, down 14 per cent)
  • South Parkdale ($1,974, down 12 per cent)

The only area to experience an increase in its annual average rental price in Q2 was North St. James Town, but the report points to a logical explanation for this.

“Rents are up 10% annually in North St. James Town, but the area was boosted by an increase in the number of listings on TorontoRentals.com at the new high-end purpose-built rental apartment called The Selby on Sherbourne, south of Bloor,” notes the report.

“The biggest decline was seen in the Moss Park area with a 14% annual decline. A condominium apartment at 320 Richmond Street East called The Modern, which was one of the most active projects in terms of monthly listings in that area, witnessed a 20% rent decline annually.”

According to Meyers, the overall declines can be partially attributed to the many homes which were previously being used as short-term units and are now hitting the regular market.

“Condominium apartment rents continue to experience rent deflation, as the much talked about short-term units hit the full-time rental market, students stay home, immigration is low, and new supply hits the market,” he said.

“The 2,229 condominium apartment completions in May was the third highest monthly total over the last three years per CMHC data, and a significant portion of those units were purchased by investors and are hitting the rental market.”

On top of all this, Meyers says it’s still too soon to truly understand how damaged the market has been by COVID-19.

“It will still take several months to assess the damage done to the market by COVID-19, when all of the GTA enters Stage 3 of the re-opening,” he said, “and we are able to see data on how many employees are hired back to their previous jobs, and how quickly consumers start spending again.”

Preferences around home buying have continued to shift through the course of the pandemic, particularly among those who aren’t even on the property ladder yet.

A quarter of Ontario renters who are currently active in the real estate market are now more interested in buying a home than they were before the pandemic, according to new consumer data collected by Nanos Research. Conducted on behalf of the Ontario Real Estate Association (OREA) for their monthly Pulse Check on Consumer Attitudes report, the research highlights changing attitudes and preferences of prospective homeowners.

As a result of the COVID-19 pandemic, 25 percent of Ontario renters who are active in real estate have expressed that they are more interested in buying a home now, compared to just 13 percent of renters who said they are now less interested. About 54 percent of renters said that they are just as interested in purchasing now as they were pre-pandemic.

Millennials and those between the ages of 35 to 54 make up the bulk of the interested buyer pool, with 62 percent and 59 percent of those age groups currently looking in the market. More renters are also actively seeking real estate in contrast to current homeowners — 63 percent of renters are searching for a home to purchase compared to 47 percent of homeowners surveyed.

“Despite the uncertainty stemming from the pandemic, housing remains a strong sector of our province’s economy, with the Canadian Dream of home ownership continuing to be a strong value for many Ontarians,” said OREA President Sean Morrison in the consumer report. “As we look ahead and move towards economic recovery in a post-COVID era, we can expect even more interest as renters and first-time home buyers look to enter the market.”

With many Ontarians locked down at home over these recent months with time to reassess their needs, it’s not uncommon for homebuyers to consider moving outside of the city in search of extra space. Three in five of those who are active in the real estate market said that living in rural areas is now more appealing to them than it was pre-pandemic, according to the survey. Similarly, three in five of those surveyed now find suburban living more attractive too.

Last week, in-person open houses were permitted to run once again throughout the majority of Ontario’s public health regions. About eight in ten active Ontarians in the market have expressed that they are comfortable or somewhat comfortable attending an in-person private showing. Sixty-six percent of those active have also reported that they would be comfortable or somewhat comfortable attending an open house with other buyers present.

A surprisingly strong showing from the Canadian housing market in June is leading economists to swiftly revise their forecasts as homebuyers returned to the market in larger than anticipated numbers.

June market data published last week by the Canadian Real Estate Association (CREA) showed country-wide home sales up 63 percent over May and more than 15 percent compared to the same period last year. Home price growth also came roaring back, almost completely erasing the losses suffered through the worst months of the COVID-19 pandemic.

The performance was so strong it led Capital Economics’ Stephen Brown to revise his home price forecast upward to 3 percent in 2021 and 5 percent in 2022. By the end of 2022, he now predicts that prices will have risen by 8 percent from their current levels.

In a research brief published late last week, Brown wrote that the June figures had “made a mockery of the near-unanimous view among economists that [Canadian] house prices would fall this year.”

Indeed, economists projecting varying degrees of home price declines were a staple of media reporting on the pandemic’s housing market impacts since the crisis began. Oxford Economics predicted a nine percent fall by early 2021 just a month ago. Earlier on, RBC forecast a seven percent decline by mid-2021, while National Bank of Canada pegged the drop to be close to 10 percent.

Even Capital Economics itself had, less than two months ago, predicted that average Canadian home prices would bottom out at 10 percent below their pre-pandemic levels while the less volatile Teranet Home Price Index would see a 5 percent drop.

After the CREA June data was released, Brown didn’t mince words when it came to the accuracy of those forecasts.

“Either way, nearly everyone was wrong, as prices have moved in the opposite direction,” he said.

Brown pointed to both substantial rises in average selling prices and a 0.5 percent increase in the MLS Home Price Index, which is a more reliable measure of home price movement over time.

Considering the unanticipated strength of the market so soon after it suffered some of the worst drops in sales activity ever recorded, Capital Economics revised its outlook for Canadian home prices in the coming years.

Brown wrote that the firm now believes prices will be more or less unchanged through the remainder of the year and begin trending upward by 2021, propelled by a recovering economy and low interest rates.

Despite this clear, rapid improvement in the market’s fortunes, the economist still included a measure of caution in the new forecast. There are still a considerable number of Canadians currently deferring their mortgage payments who may be forced to sell their homes when the deferral programs wind down in September.

He also flagged the precipitous pandemic-induced decline in immigration — the fundamental driver of population growth — as a key challenge on the horizon for the market.

York University has officially received the green light from the provincial government to move forward with its long-awaited Markham Centre Campus (MCC).

Construction for the campus, which will focus on courses geared toward themes of technology and entrepreneurship, will commence July 2020 and will be completed in time for the fall semester 2023. The campus will accommodate up to 4,200 students in Phase 1, with the flexibility to respond to future growth demands.

The Ontario government will help fund the new campus, which will become the first publicly assisted university in the York Region.

According to the province, this new campus expansion is the first project proceeding under the government’s updated Major Capacity Expansion Policy Framework, which encourages the responsible development of new postsecondary campuses, ensuring minimal cost to the taxpayer, a high-quality education that aligns with labour market needs, and expansion plans that align with community planning and industry partnerships.

The new state-of-the-art campus will offer students innovative, relevant job-ready academic programming and research opportunities focusing on digital media, engineering and technology, entrepreneurship, new media and communications.

The campus will also consolidate York University’s already strong academic presence in the City of Markham (YSpace, IBM Innovation Space – Markham Convergence Centre and the IBM Partnership). Finally, the campus will help to fulfill York Region’s future labour market and civic leadership needs by providing transferable 21st-century skills that are at the core of future economic competitiveness and community development in Markham, York Region, and across Ontario.

“The time has come for a new, innovative approach to financing college and university expansions. Instead of the province writing multi-million-dollar cheques, we have developed a system that encourages the development of new campuses with a much smaller cost to the taxpayer,” said Premier Doug Ford. “The new Markham Centre Campus is a model of responsible expansion which will offer local students access to a world-class education and prepare them for the jobs of the future.”

The construction of the Markham campus will begin this month and will aid in York Region’s post-COVID-19 economic recovery, as it is expected to generate over $350 million in immediate economic benefits and to create over 2,000 jobs.

The economic impact of COVID-19 has noticeably increased the need for postsecondary institutions to modernize and focus on job-market relevance by preparing students to succeed in the global job market.

The Markham campus will specialize in flexible learning formats to serve a diverse population of students, including young adults, as well as mature and mid-career learners, newcomers to Canada and workers impacted by technological change.

Detached homes around Regent Park and Scarborough’s Birchcliff saw the biggest price gains in Toronto’s pricey real estate market, according to RE/MAX

Regent Park and Scarborough’s Birchcliff are some of the neigbourhoods where Toronto house prices saw the biggest gains in 2020, according to the RE/MAX 2020 Hot Pocket Communities report. The report compares the average price for detached homes over the first six months in 2019 and 2020.

The city’s average home price hit an all-time high in June, despite the COVID-19 pandemic. Low supply has fuelled demand. But some areas are feeling the heat more than others.

The average price for the rare detached homes in the area containing Regent Park, Cabbagetown, Jamestown and the Church-Yonge corridor jumped $2,555,500 from $1,641,813. That 55.7 per cent increase is the highest for any neighbourhood in the GTA. But it coincides with a 75 per cent drop in sales, from eight transactions in 2019 to two in 2020.

Highs and lows
“Strong demand characterized much of the first quarter of 2020, setting the stage for a record-breaking spring market in the Greater Toronto Area,” says Christopher Alexander.

The RE/MAX of Ontario-Atlantic Canada executive vice president says the real estate market has been bouncing back after the severe downtown caused by COVID-19. “With the easing of restrictions and the province moving into the third, and perhaps final phase, we anticipate that the housing market will likely accelerate.”

The Annex, Wychwood and Deer Park area came second place in terms of price growth, climbing 25.7 per cent to $2,918,968. The Birchcliffe-Cliffside area in Scarborough has seen a significant uptick in new developments and businesses. It tied with the High Park and Roncesvalles area for third place with 18.4 per cent gains. Detached homes in the east end area just west of the Scarborough Bluffs rose to $1,095,287. That’s nearly half the $2,050,596 figure for homes the High Park and Roncesvalles area.

Toronto’s priciest real estate had the steepest declines. The Rosedale and Moore Park area plunged 15.2 per cent from $3,687,292 to $3,127,643. The Bridle Path and Windfields area were not far behind. The average home price dropped 9.5 per cent from $3,697,343 to $3,346,422. While sales in Toronto were down between 5 and 75 per cent depending on the neighbourhood, Bridlepath and Windfields is the only area that had an increase in sales at 20 per cent.

Beyond Toronto
The 905 hasn’t seen any declines in average detached home prices. The Township of Brock near Lake Simcoe made the biggest climbs, rising 15.2 per cent to $552,711. Essa township in Simcoe is close behind with 14.6 per cent at $626,003. And then comes Vaughan, rising 13.5 per cent to $1,369,407.

“While the strength of the market is underscored by rebounding economic fundamentals, it’s clear that we are not out of the woods yet, given what’s happening around the world,” adds Alexander. He echoes warnings from realtors and the Canada Mortgage and Housing Corporation.

The CMHC predicts a sharp downturn beginning in the fall as COVID-19 relief programs are expected to dry up. The lack of immigration, low employment, a subsequent increase in supply and other economic impacts from COVID-19 could be factors that bring real estate prices drastically down.

Throughout the COVID-19 pandemic, homeowners have had a lot of time to reassess what they need in a home. For some, this has meant considering a new property outside of the city, somewhere that might offer more space for fewer dollars.

While there’s been much discussion within the real estate industry about homebuyers wanting to relocate to communities outside of Toronto, some experts say that this won’t necessarily translate into a boom for suburban growth, or waning interest in city-living.

“I would still prefer to have and enjoy the downtown, or what any urban centre has to offer, versus living in the suburbs and getting into my car and only being able to drive to Walmart,” said Naama Blonder, a Toronto-based architect, urban planner and co-founder of Smart Density.

Blonder explained that there’s been much discussion around the perks of suburban living versus city life during the pandemic. This dialogue often touches on how city homeowners tend to lack large, private backyards — a resource that urban dwellers have craved after months of lockdown — and may face more space-related challenges when working from home.

However, Blonder pointed out that if home office culture is here to stay, city homes, even without access to a yard, offer proximity to a wealth of park and public amenities that exist outside of the home that suburban and rural residences wouldn’t.

A proponent of family-friendly housing, Blonder explained that city condos and units can do more to accommodate families by addressing their needs in tandem with public spaces. For instance, condos don’t necessarily need to be the size of a house, but can offer smart layouts with more bedrooms and amenities within the building that can’t be included in the unit itself. One analogy she uses is Paris — young families thrive in the European city without private backyards.

“I know as someone who advocates for family-friendly housing and high-density for working families, this product currently does not exist, or is not enough,” she said. “And it’s something that I’ve been talking a lot about. I think that the demand is here, and the people won’t give up the city.”

 

Along with the convenience of a shorter commute time that Millennial buyers often seek, and the independence cities can offer for growing teenagers, Blonder believes the suburbs will not necessarily flourish post-COVID while the desire to live in Toronto continues to grow.

“I don’t think we will need to face that, the question of cities, not just Toronto, but cities declining,” said Blonder. “I think we now understand, for decades, even if we’re not there yet, that building compact cities is better for the environment.”

Real estate agents have noticed that homebuyers have used the pandemic as an opportunity to analyze what’s important to them. Agents in outer-city communities are receiving higher-than-normal levels of buyer inquiries. Kori Marin and Ralph Fox, Toronto real estate brokers and managing partners at Fox Marin Associates, have noted buyers weighing their options more and strategizing for the long-term.

“I think real estate is a very large component to that obviously, but we just don’t see people, in our experience, throwing caution to the wind and saying, ‘That’s it, we’re out,’” said Fox.

The pandemic has forced us to live in new ways, whether it be going outside less and being around family more. Similarly, Marin said that the same scenario is happening for owners about the perspective of their homes — the idea of living in a rural setting may seem dreamy at the moment for city residents, but the appeal could wear off over time.

“I do think [it’s] kind of a temporary romanticism of what it might look like only because of the state that we’re in right now,” explained Marin. “I’m one of those people that does that all the time. I can see why people are attracted to it, but I don’t think it will be a long-lived trend. I can’t anticipate that it will last forever.”

When it comes to competition in the market, Toronto’s renters are finally getting some relief as the city’s vacancy rate within purpose-built apartments increased to 1.8 percent in the second quarter of 2020, the highest level in over five years.

Real estate research firm Urbanation began tracking the vacancy rate at the beginning of 2015. To determine the rate, it looks at purpose-built rentals completed in the Toronto region since 2005. The second quarter reading is the highest level observed since the firm began its quarterly surveys.

Toronto’s rental availability rate, which adds units that are set to be vacated by tenants, also hit the highest level recorded since Urbanation began tracking it in 2015. The firm reported the availability rate as 3.2 percent this past quarter, compared to 2.3 percent in the first quarter of the year and 2 percent in the second quarter of 2019.

On the rental pricing side, units that were listed for rent during the second quarter averaged $2,420, a 3.7 percent year-over-year decline. While this sounds like a sharp drop, Urbanation noted that on a per square foot basis, rents declined by a more modest 0.6 percent to $3.22 per square foot over the same period in 2019. This suggests the larger monthly rent price drop was likely weighted by the composition of units listed during that period.

As the vacancy rate rises and demand cools amid the ongoing disruptive effects of the pandemic, Urbanation found that over 40 percent of buildings it surveyed had offered incentives such as a month of free rent to attract potential new tenants.

The rising vacancy rate came as purpose-built rentals under construction in the Toronto region continued to hover around a 40-year high, meaning more supply for the market is on its way. At the end of the second quarter, there were 13,358 purpose-built rental units under construction across the Greater Toronto Area, up 17 percent from the second quarter in 2019.

The pandemic has forced most of us to learn to live with a good dose of uncertainty when it comes to our ability to make even short-term plans.

But despite being faced with unprecedented challenges brought on by COVID-19, Canada’s central bank still has to confidently make strategic policy choices with an eye to the seemingly distant future.

So, when the bank said last week during a regularly scheduled announcement that it would not be moving its key interest rate from the current historically low level of 0.25 percent, many read deeper into its language.

Several economists well-versed in parsing its announcements arrived at this conclusion: the bank is comfortable keeping interest rates at their current level until at least 2023.

At the outset of the pandemic, the Bank of Canada slashed its key interest rate, also known as the overnight rate, several times in quick succession to stabilize the economy. The bank has since signalled that it will not move the rate any lower than the current 0.25 percent level, calling it the “effective lower bound.” But, it has also said that it won’t be ratcheting the rate back up until certain economic recovery criteria have been met.

“The Bank of Canada’s pledge today to keep the policy rate unchanged until the ‘2 percent inflation target is sustainably achieved’ implies that it has no plans to raise interest rates until at least 2023,” wrote Capital Economics’ Stephen Brown in response to the bank’s announcement last week.

TD Senior Economist Brian DePratto echoed this assessment, noting that the heavy toll the pandemic has taken on the economy and the uncertainty in the months and years to come require the Bank of Canada “to stay in repair mode for some time.”

While the Bank of Canada rate announcements may not be marked on the calendars of most homebuyers, they play a critical role in determining where mortgage rates are heading in the years to come. Mortgage lenders are sensitive to where the central bank’s key interest rate is moving and adjust their borrowing rates accordingly.

The current low mortgage rate environment is a major reason why many experts believe Canada’s housing market — which posted a strong performance in June — will bounce back relatively quickly from the economic downturn and widespread business shutdowns spurred by the pandemic.

“As the real estate market continues to rebound, competitive pressure between mortgage lenders is causing both fixed and variable rates to inch down on a continuous basis,” mortgage comparison site Ratehub.ca shared in an email alert to subscribers following the Bank of Canada’s announcement last week.

Of course, mortgage rates can only fall so low, but with the Bank of Canada’s forward-looking signalling last week, it’s likely that homebuyers don’t exactly need to rush to take advantage of these rock bottom rates.

As BMO Senior Economist Robert Kavcic put it in a research note published last week on the bank’s interest rate outlook: “In case it’s not clear, we’re talking years here, not months or quarters.”

Preferences around home buying have continued to shift through the course of the pandemic, particularly among those who aren’t even on the property ladder yet.

A quarter of Ontario renters who are currently active in the real estate market are now more interested in buying a home than they were before the pandemic, according to new consumer data collected by Nanos Research. Conducted on behalf of the Ontario Real Estate Association (OREA) for their monthly Pulse Check on Consumer Attitudes report, the research highlights changing attitudes and preferences of prospective homeowners.

As a result of the COVID-19 pandemic, 25 percent of Ontario renters who are active in real estate have expressed that they are more interested in buying a home now, compared to just 13 percent of renters who said they are now less interested. About 54 percent of renters said that they are just as interested in purchasing now as they were pre-pandemic.

Millennials and those between the ages of 35 to 54 make up the bulk of the interested buyer pool, with 62 percent and 59 percent of those age groups currently looking in the market. More renters are also actively seeking real estate in contrast to current homeowners — 63 percent of renters are searching for a home to purchase compared to 47 percent of homeowners surveyed.

“Despite the uncertainty stemming from the pandemic, housing remains a strong sector of our province’s economy, with the Canadian Dream of home ownership continuing to be a strong value for many Ontarians,” said OREA President Sean Morrison in the consumer report. “As we look ahead and move towards economic recovery in a post-COVID era, we can expect even more interest as renters and first-time home buyers look to enter the market.”

With many Ontarians locked down at home over these recent months with time to reassess their needs, it’s not uncommon for homebuyers to consider moving outside of the city in search of extra space. Three in five of those who are active in the real estate market said that living in rural areas is now more appealing to them than it was pre-pandemic, according to the survey. Similarly, three in five of those surveyed now find suburban living more attractive too.

Last week, in-person open houses were permitted to run once again throughout the majority of Ontario’s public health regions. About eight in ten active Ontarians in the market have expressed that they are comfortable or somewhat comfortable attending an in-person private showing. Sixty-six percent of those active have also reported that they would be comfortable or somewhat comfortable attending an open house with other buyers present.

Canada’s housing market came roaring back in June, with country-wide home sales tracked by the Canadian Real Estate Association (CREA) returning to normal levels for the month.

Toronto, Montreal and Vancouver led the way in sales gains for June, with transactions rising 83.8 percent, 75.1 percent and 60.3 percent, respectively, over May totals.

And, according to the data released today, it wasn’t just home sales picking up steam. At the national level, CREA said the average price for a home sold in June was close to $539,000, a 6.5 percent increase from the same month a year ago.

This gain was strong enough to claw back nearly all the pandemic-spurred price losses that occurred through the spring.

“Average prices posted a huge gain in June, almost entirely erasing pandemic-related losses, with prices down only 0.5% compared to February,” wrote TD Economist Rishi Sondhi.

“Notably, in markets such as Toronto, there was a resurgence in activity in the high end of the market. This reinforces the notion that markets are getting stronger, as it’s not just low-priced inventory that’s moving,” he added.

In a research brief published this morning in response to the June housing data, BMO Chief Economist Douglas Porter noted that pent-up demand from the spring was a major driving force in this strong performance and that it would be a case of wait-and-see when it comes to whether the momentum can be sustained.

“But certainly the early indications are that housing is one sector that has managed to hold up remarkably well on balance in the pandemic,” Porter wrote with guarded optimism about the market’s prospects.

While there’s still plenty of uncertainty surrounding the market’s trajectory in the coming months, Porter predicted that low interest rates and tight housing supply will beat out negative factors such as lingering effects of large-scale shutdowns and lower immigration levels.

In the shorter term, CREA said preliminary sales figures have July slated for an even stronger performance than what was observed in June.

A surprisingly strong showing from the Canadian housing market in June is leading economists to swiftly revise their forecasts as homebuyers returned to the market in larger than anticipated numbers.

June market data published last week by the Canadian Real Estate Association (CREA) showed country-wide home sales up 63 percent over May and more than 15 percent compared to the same period last year. Home price growth also came roaring back, almost completely erasing the losses suffered through the worst months of the COVID-19 pandemic.

The performance was so strong it led Capital Economics’ Stephen Brown to revise his home price forecast upward to 3 percent in 2021 and 5 percent in 2022. By the end of 2022, he now predicts that prices will have risen by 8 percent from their current levels.

In a research brief published late last week, Brown wrote that the June figures had “made a mockery of the near-unanimous view among economists that [Canadian] house prices would fall this year.”

Indeed, economists projecting varying degrees of home price declines were a staple of media reporting on the pandemic’s housing market impacts since the crisis began. Oxford Economics predicted a nine percent fall by early 2021 just a month ago. Earlier on, RBC forecast a seven percent decline by mid-2021, while National Bank of Canada pegged the drop to be close to 10 percent.

Even Capital Economics itself had, less than two months ago, predicted that average Canadian home prices would bottom out at 10 percent below their pre-pandemic levels while the less volatile Teranet Home Price Index would see a 5 percent drop.

After the CREA June data was released, Brown didn’t mince words when it came to the accuracy of those forecasts.

“Either way, nearly everyone was wrong, as prices have moved in the opposite direction,” he said.

Brown pointed to both substantial rises in average selling prices and a 0.5 percent increase in the MLS Home Price Index, which is a more reliable measure of home price movement over time.

Considering the unanticipated strength of the market so soon after it suffered some of the worst drops in sales activity ever recorded, Capital Economics revised its outlook for Canadian home prices in the coming years.

Brown wrote that the firm now believes prices will be more or less unchanged through the remainder of the year and begin trending upward by 2021, propelled by a recovering economy and low interest rates.

Despite this clear, rapid improvement in the market’s fortunes, the economist still included a measure of caution in the new forecast. There are still a considerable number of Canadians currently deferring their mortgage payments who may be forced to sell their homes when the deferral programs wind down in September.

He also flagged the precipitous pandemic-induced decline in immigration — the fundamental driver of population growth — as a key challenge on the horizon for the market.

As the COVID-19 curve continues to flatten across the country and more Canadians are returning to the housing market, a new report from Engel & Völkers reports a notable spike in demand for luxury real estate.

The Canadian Luxury Real Estate brand released its Mid-Year 2020 Report on Wednesday, which says demand for luxury properties is spiking across the country as the curve continues to flatten in Canada.

The market report provides an analysis of residential real estate through April, May, and June across five markets including Halifax, Montréal, Ottawa, Toronto, and Vancouver and it discusses luxury real estate across three price segments of under $1 million, $1-4 million and over $4 million as listed in the Multiple Listing Service (MLS).

On a national level, Canada’s major metropolitan areas have shown market resiliency following a significant pause during the COVID-19 pandemic.

The report says April was marked by “generational lows” and that home sale activity fell by a record 56% compared to an already affected March. Year-over-year, national sales dropped by 57.6% and the number of newly listed homes across Canada declined by 55% in April compared to March.

Despite these declines, prices held in most markets through the pandemic and national home sales rebounded in May by a record 56.9%, amounting to one-third of a return of the activity lost between February and April.

What’s more, the number of new listings across the country climbed by a record 69% in May compared to April. By June, home prices returned to pre-pandemic levels, as inventory increased, however, Engel & Völkers says this still wasn’t enough to meet pent-up buyer demand.

The luxury real estate brand noted it specifically saw a 30% year-over-year increase in closed sales volume and a 28% year-over-year increase in average sales price across Canada from January to June 2020.

On a local level, the report showed that sales of homes and townhomes accelerated in June, while the condo slowdown presented a temporary buying opportunity in Toronto’s downtown core.

In the lead up to the pandemic, Q1-2020 was busy in Toronto and resales were up 49% year-over-year during the first two weeks of March. However, as lockdowns began, home sales plummeted 16% in the latter half of the month.

May brought the first look of market recovery as Canada’s largest city saw housing activity resume with home sales increasing by 55.2% and new listings jumping by 47.5% compared to the previous month. At the close of the month, prices rose by 3% year-over-year, indicating the market was regaining traction and moving toward normalcy.

However, as June arrived, so did the pent-up buyer demand, specifically for detached and semi-detached homes. This, coupled with tight housing supply and growing consumer confidence post-COVID, effectively positioned Toronto as a seller’s market.

Residential home prices were up 11.9% year-over-year and average sales price was also up substantially by 7.8% month-over-month, signalling a revival in the higher price-point segment in the Greater Toronto Area (GTA).

“Despite a mid-Q2 pause, Toronto’s popularity among domestic and international migrants is keeping the market on firm ground,” reads the report.

Anthony Hitt, president & CEO, Engel & Völkers Americas, says Canadian markets are proving their resiliency and that demand in Halifax, Toronto, Vancouver, Montréal, and Ottawa held through the pandemic, with high-demand price points selling quickly with multiple offers.

“COVID-19 has caused Canadians to rethink how they want to live, causing a shift in buyer preferences and habits in real estate. This is reflected in rising demand for properties with flexible living spaces to meet both work and lifestyle needs and amenities such as pools, entertainment rooms and outdoor living spaces and entertainment spaces.”

Hitt added that he’s also starting to see a trend toward cottage country and the suburbs, which is creating a temporary buying opportunity within the urban condo market as people prioritize properties with more space.

The latest monthly statistics released by the Canadian Real Estate Association (CREA) for June highlighted that home sales and new listings rebounded to normal levels across Canada last month, following a period of historic lows this April and May due to the pandemic. Almost 1 million jobs were added back to the Canadian economy in June, and the housing market showed signs of growing “cautious optimism” among buyers and sellers, as CREA noted.

Further, as July 1 approached, recently announced changes to the Canada Mortgage and Housing Corporation (CMHC) mortgage insurance borrowing criteria loomed, which may have incentivized certain buyer segments to accelerate their search. As such, national home sales improved 63% since May, and there was a 49.5% monthly spike in new listings. Average home prices rose 6.5% nationally year-over-year (y-o-y) to almost $539,000 in June.

A closer look at real estate markets across Ontario for June revealed that regional market trends closely mirrored national housing activity. After all, Ontario accounted for 378,000 of the total jobs recovered in June, and much of the province graduated into Stage 2 of reopening by the end of the month. To get a gauge on how the pandemic impacted price and sales activity in Ontario, reviewed average home prices and sales data for June from local real estate boards and CREA for 28 Ontario markets, comparing changes on an annual basis to highlight how and where the market shifted since last year.

Our analysis and findings provide a bird’s eye view of market dynamics to give buyers and sellers an indication of what to expect in their local real estate market. The average home price included in this analysis applies to the local market as a whole and takes into account a number of different property types, neighbourhoods, and square footage values among other factors. As such, prospective buyers and sellers will benefit from a detailed review of sales, new listings and price trends for specific home types of interest at the city, town, or neighbourhood level.

GTA Cities Dominate List of Ontario Markets With Highest Average Home Price Increases

In 9 of the 28 markets included in our analysis, the average home price grew over $100,000 annually. Oakville topped the list, with the annual average home price increasing a whopping $177,550 or 17% since last year to $1,249,685. Markham followed close behind – the annual average home price grew $171,726 y-o-y, an impressive 19% increase to $1,086,502.

In total, 5 York Region markets posted not just six-figure annual average price growth, but double digit rates of annual average price growth as well. In addition to Markham, the average home price increased by $149,010 or 16% in Aurora to $1,068,255; by $136,466 or 13% in Vaughan to $1,154,352; by $130,514 or 12% in Richmond Hill to $1,213,191, and by $117,193 or 15% in Newmarket to $889,534. Although the average home price increased substantially in these York region markets, sales in June have yet to catch-up to last year’s levels; Richmond Hill had the largest sales gap, with transactions still down 17% from last year.

Mississauga, Halton Hills, and the City of Toronto completed the list of regions where average home prices grew in the six figures annually. Average home prices rose by $140,265 in Mississauga, $111,183 in Halton Hills, and by $106,657 in the City of Toronto.

6 Markets Experienced Annual Sales Growth Over 20%, Including Barrie at 41%

15 of the 28 markets studied experienced y-o-y sales growth this June, with 6 markets even clocking in annual sales increases of over 20%. Barrie led the pack with a staggering 41% increase in sales and 321 homes changing hands last month. New listings in Barrie were slower to catch up in the region and created strong seller’s market conditions this June with a sales-to-new-listings-ratio (SNLR) of 74%.

A seller’s market exists when the SNLR – the ratio of the number of sales to the number of properties listed in a given period – is over 60%. It implies that a greater number of properties sold relative to newly listed homes, favouring sellers over buyers. In Barrie, buyers faced even greater competition this year compared to last June when the SNLR was 56% and housing demand and supply were balanced. Balanced market conditions exist when the SNLR is between 40% and 60%.

Sudbury Region and Pickering rounded up the top three regions with the highest rate of sales growth, with sales increases of 27% and 24% each. Among all the regions included in our analysis, Sudbury exhibited the most prominent seller’s market conditions with an SNLR of 87%. It was even more competitive for Sudbury buyers this year compared to June 2019 when the SNLR was 64%. Pent up buyer demand from April and May, when economic uncertainty was the highest, may have been a contributor to these higher levels of sales in June.

Among the regions with the slowest positive sales growth were Oakville, London, and Milton. Each of these 3 regions experienced a sales increase of 5% y-o-y.

Richmond Hill (-17%), Aurora (-14%), and Mississauga (-14%) experienced the greatest sales declines y-o-y. This was followed by Vaughan (-13%) and the City of Toronto, where 2,830 homes sold in June – a 12% decline y-o-y. Despite a double-digit decline in sales in June, Toronto remained in a balanced market with an SNLR of 46%.

Below find our infographic highlighting average price and sales growth in 28 housing markets across Ontario this June followed by lists of the regions that experienced the highest annual price and sales growth.

 

Top 5 Markets for Annual Average Price Growth (Dollar)

Oakville

  • Average home price, June 2020: $1,249,685 (+$177,550 or +17%)
  • Home sales, June 2020: 322 (+5%)

Markham

  • Average home price, June 2020: $1,086,502 (+$171,726 or +19%)
  • Home sales, June 2020: 333 (-3%)

Aurora

  • Average home price, June 2020: $1,068,255 (+$149,010 or +16%)
  • Home sales, June 2020: 87 (-14%)

Mississauga

  • Average home price, June 2020: $891,012 ( +$140,265 or +19%)
  • Home sales, June 2020: 742 (-14%)

Vaughan

  • Average home price, June 2020: $1,154,352 (+$136,466 or +13%)
  • Home sales, June 2020: 293 (-13%)

Top 5 Markets for Annual Average Price Growth (Percentage)

Niagara Region

  • Average home price, June 2020: $538,946 (+$98,191 or +22%)
  • Home sales, June 2020: 628 (+8%)

Markham

  • Average home price, June 2020: $1,086,502 (+$171,726 or +19%)
  • Home sales, June 2020: 333 (-3%)

Mississauga

  • Average home price, June 2020: $891,012 (+$140,265 or +19%)
  • Home sales, June 2020: 742 (-14%)

London

  • Average home price, June 2020: $486,372 (+$78,098 or +19%)
  • Home sales, June 2020: 748 (+5%)

Windsor-Essex Region

  • Average home price, June 2020: $401,465 (+$65,422 or +19%)
  • Home sales, June 2020: 742 (+9%)

Top 5 Markets for Annual Sales Growth (Percentage)

Barrie

  • Average home price, June 2020: $556,932 (+$67,591 or +14%)
  • Home sales, June 2020: 321 (+41%)

Sudbury Region

  • Average home price, June 2020: $317,592 ( +$33,978 or +12%)
  • Home sales, June 2020: 356 (+27%)

Pickering

  • Average home price, June 2020: $772,237 (+$74,320 or +11%)
  • Home sales, June 2020: 161 (+24%)

Thunder Bay Region

  • Average home price, June 2020: $267,537 (+$12,945 or +5%)
  • Home sales, June 2020: 269 (+23%)

Clarington

  • Average home price, June 2020: $632,112 (+$67,654 or +12%)
  • Home sales, June 2020: 240 (+22%)

Methodology

Sources for average home prices, sales and new listings:

Ajax, Aurora, Brampton, City of Toronto, Clarington, Halton Hills, Markham, Milton, Mississauga, Newmarket, Oakville, Oshawa, Pickering, Richmond Hill, Vaughan, Whitby: Toronto Regional Real Estate Board
Hamilton and Burlington: REALTORS® Association of Hamilton-BurlingtonLondon: London & St. Thomas Association of REALTORS®
Barrie: Barrie & District Association of REALTORS®
Kitchener and Waterloo: Kitchener-Waterloo Association of REALTORS®
Guelph: Guelph & District Association of REALTORS®
Niagara region, Ottawa region, Sudbury region, Thunder Bay region, Windsor-Essex region: Canadian Real Estate Association
The sales-to-new-listings ratio (SNLR) is calculated as June sales divided by new listings in June.

 

 

Furnished condo rental listings offered for standard 12-month leases in the Toronto region increased 52 percent in the second quarter of 2020 compared to the same time last year, according to new data released this week by Urbanation.

There were 1,877 furnished units being offered across the GTA from April to June, making up 12 percent of all condo rental listings during the quarter. The elevated figure also represented 21 percent of the increase in total condo rental listings compared to the same period a year ago.

The data from Urbanation is another clear indication that many former short-term rentals that once occupied Airbnb and similar platforms are quickly migrating to the long-term rental market.

Toronto’s short-term rental market has been hit with a one-two punch this spring as new stricter rules that require rental hosts to register with the city were coupled with ordinances prohibiting owners from renting out dwellings that are not within their principal residence.

At the same time, the COVID-19 pandemic decimated tourism and business travel and the province banned short-term rentals for all but essential uses for most of the spring.

Many experts believe that a wave of former Airbnb units hitting the long-term rental market or the resale market is one of the biggest potential sources of volatility in the Toronto region’s housing market.

“The City of Toronto estimates that there are between 8,000 and 10,000 Airbnb units that would not be compliant with new upcoming short-term rental regulations, some of which may end up on the resale market,” wrote Diana Petramala and Victoria Colantonio, researchers at Ryerson University’s Centre for Urban Research, in a note published late last week.

Beyond a pronounced rise in Toronto condo listings on the resale market this summer, there’s no direct evidence yet that a wave of former Airbnb units is hitting the market. Urbanation’s second quarter data indicates that it’s possible that owners are trying their luck with the long-term rental market first. Even then, they may not necessarily choose to sell their units if they can’t lease them out right away.

Urbanation’s report offers a clue concerning current renter demand for furnished units. According to its second quarter data, the average rental price for a furnished unit dropped 12.5 percent over the previous year to $2,492 as lease activity fell 24 percent.

Of the overall health of the Toronto region’s rental market, Urbanation President Shaun Hildebrand said it’s clearly been impacted but it remains in an “orderly” state despite the economic volatility.

“The GTA rental market has been clearly impacted by COVID-19, though the transition has been orderly so far with vacancy remaining low and rent declines being modest outside of some specific pockets in the city. Government income support has played a big role as job losses mounted and immigration dropped,” Hildebrand said in a media release.

Aggregate price of a home increased 9.1 per cent to $592,059 in the second quarter of 2020, survey finds

Hamilton home prices are up nearly 10 per cent despite the COVID-19 pandemic, a new survey by Royal LePage has found.

According to the Royal LePage House Price Survey released Thursday, the aggregate price of a home in Hamilton increased 9.1 per cent to $592,059 in the second quarter of 2020.

Broken out by housing type, the median price of a standard two-storey home increased 9.7 per cent year-over-year to $616,992, and the median price of a bungalow increased 7.3 per cent year-over-year to $557,340. During the same period, the median price of a condominium rose 10.3 per cent to $414,110.

“I believe that interest rates are extremely low right now, which is obviously motivating people that were in the market to to seek the house they want,” said Joe Ferrante, Royal LePage State Realty broker of record.

“Are they looking possibly for a deal? A lot of people are at home right now and realizing that there are opportunities out there. But I would say the biggest thing driving it is the rates, and what’s driving the prices up is the lack of product … it’s a simple supply and demand issue.”

A buyers’ market
Ferrante said due to COVID-19, it’s a lot easier to be a buyer right now than it typically is to be a seller.

“[If] you want to buy something, you put on your mask, your gloves and off you go and you go into other people’s houses, but for sellers there’s still some reluctance there.”

“I’d say for every five people that would have potentially put their house up for sale, maybe three of them are, so that’s obviously driving up the prices.”

Home sales plunged earlier this year as the COVID-19 pandemic forced buyers to the sidelines, but they have picked up as businesses have started to reopen.
Even with the earlier plunge in prices, Ferrante said a year-on-year comparison in Hamilton shows the numbers are still relatively close.

“I think they were down by one or two percentage points for the number of sales overall, and that would be the entire Hamilton area, including Burlington,” he said.

“So it’s very, very close. Down but not substantially.”

Torontonians heading to Hamilton
Ferrante added that while there has always been healthy and steady real estate demand from Toronto, the level of interest his brokerage is seeing has significantly increased.

“The more Toronto-based buyers can work from home, the more demand there is for real estate in Hamilton,” he said.

“We are seeing young Toronto-based families who have been largely house-bound during the pandemic tell us that they need more space. Home offices and large yards quickly moved up the list of important features.”
Agents excited, but will it last?
Ferrante said it’s uncertain if the increased prices will last, and it’s clear what is the real reason for the uptick.

“I’ve got some agents that are excited but it’s too soon to tell where this is going to lead us.”

Nationally, the aggregate price of a home in Canada increased 6.8 per cent year-over-year to $673,072 in the second quarter. Once provinces allowed regular real estate activity to resume, demand surged in many markets. Inventory levels, already constrained pre-pandemic, have failed to keep pace.

Buying a house can be overwhelming, especially in Canada’s largest city. But, depending on the area, it can actually be pretty attainable.

If you’re looking for affordable housing in Toronto, the top five neighbourhoods with the cheapest average price in 2019 are the east-end areas of Rouge, Malvern, Bendale, Woburn, and Morningside, according to Moneysense.

 

$722,209

IS THE AVERAGE AREA PRICE IN 2019 FOR THE ROUGE NEIGHBOURHOOD, THE CHEAPEST IN TORONTO

Looking at the whole study, 2019 average prices ranged from $722,209 in Rouge to $3,008,096 in Rosedale-Moore Park.

Just a few months ago, Toronto house prices actually jumped by more than what many residents make in a year.

The MoneySense study assessed a range of factors to find the 6ix’s best neighbourhoods for buying real estate. And if you don’t fancy the downtown life, try Guelph!

 

Canadian cities are starting fewer new home building projects during the pandemic. Canada Mortgage and Housing Corporation (CMHC) data shows urban housing starts fell in Q2 2020. Despite a general slowdown, Toronto continued to push to a multi-year high for new projects started.

Canadian Urban Housing Starts Fall
Canada’s urban housing starts fell, as housing activity slowed across the country. There were 177,825 housing starts seasonally adjusted at annual rates (SAAR) in Q2 2020, down 8.0% from the previous quarter. This is a 14.2% decrease compared to the same quarter a year before. The drop is likely due to the pandemic, but that didn’t slow down all markets.

Canadian Urban Real Estate Starts
The number of housing starts in Canadian cities with over 10,000, seasonally adjusted at annual rates.

Toronto Housing Starts Jump To Highest Level Since 2018
Greater Toronto building starts bucked the trend, actually soaring to a multi-year high. Starts hit 44,210 SAAR in Q2 2020, up a massive 46.9% from the previous quarter. This is also a massive 40.9% increase compared to the same quarter last year. Toronto is now at the highest level of starts since Q4 2018. Despite the pandemic, developers have been busy building.

Toronto Real Estate Starts
The number of housing starts in Toronto, seasonally adjusted at annual rates.

Vancouver Housing Starts Fall Over 46%
Greater Vancouver housing starts are down significantly, despite a bump in activity. Starts hit 21,375 SAAR in Q2 2020, up 14.7% from the previous quarter. The bump did little compared to last year though, with starts down 46.1% from last year. A small increase from the previous quarter, but new starts are still falling sharply.

Vancouver Real Estate Starts
The number of housing starts in Vancouver, seasonally adjusted at annual rates.

Montreal Housing Starts Fall Over 26%
Greater Montreal housing starts also made a significant decline in the last quarter. Starts reached 22,481 SAAR in Q2 2020, down 17.27% from the previous quarter. This resulted in a 26.89% decline compared to the same quarter last year. Building activity is still relatively high to historic standards, but has been slowing faster than the national average.

Montreal Real Estate Starts
The number of housing starts in Montreal, seasonally adjusted at annual rates.

Canadian housing starts in cities are generally slowing down, with a few exceptions. Some cities can chalk this up to the pandemic, which halted the economy. However, slow pre-sales and project cancellations in cities like Vancouver, are also playing a significant role.

Any chance of a drop in real estate prices associated with the COVID-19 pandemic already seems a thing of the past as the Toronto market came roaring back last month, according to the June sales figures provided by the Toronto Regional Real Estate Board.

Sales are up an incredible 89 per cent, and not just compared to last month. Sales are also up 84 per cent from a year ago in May 2019 after a serious slowdown during the height of the pandemic in March and April.

The MLS® Home Price Index Composite Benchmark is also up by 8.2 per cent year-over-year in June. But there was even more significant price growth in certain sectors of the Toronto market.

For instance, there was strong growth in the detached and semi-detached segments of the market in the city of Toronto at 14.3 per cent and 22 per cent respectively.

The average selling price across the Greater Toronto Area real estate market in June is $930,869 — up by 11.9 per cent compared to June 2019.

“Following the broader movement to reopen the economy in June, we experienced a very positive result in terms of home sales and selling prices. Before the onset of COVID-19, there was a great deal of pent-up demand in the market. This pent-up demand arguably increased further over the past three months. We are still in the early days of recovery, but barring any setbacks, we should continue to see stronger market conditions in the second half of 2020 as households look to satisfy their ownership housing needs,” said Lisa Patel, TRREB president.

New listings were up 2.1 per cent when compared to last year. However, active listings on TRREB’s MLS® System at the end of June 2020 were down by 28.8 per cent compared to June 2019.

On the ground, realtor Jamie Dempster says the Toronto real estate market is “on fire.” Recently, he had one west-end home sell after seeing 25 offers, and another 30 offers on a home along the Danforth in the east end of the city.

“The low interest rates coupled with the fear of missing out on home ownership in Toronto has the market hitting heights we haven’t seen since 2017,” he says. “Anything priced between $800,000 and $2,000,000 is seeing multiple offers. Once you move over the $2,000,000, it’s neighbourhood specific and slightly softer.”

According to Dempster, one factor impacting the market is older Toronto homeowners who had planned on moving into retirement residences this year are holding off that decision in light of recent events.

“This is a big part of the housing stock that we usually see come to market,” Dempster says. “Without this housing stock, the market is even tighter and the buyers outnumber new listings 10-1.”

 

Toronto homebuyers appeared unfazed by the tumultuous spring and returned to the market in droves in June.

There were 8,701 home sales in the Toronto region last month, according to data released today by the Toronto Regional Real Estate Board (TRREB). That’s up 89 percent from May’s total and down only 1.4 percent over June 2019. Detached home and townhome sales outside the City of Toronto took on an outsized role in leading the sales recovery, TRREB said.

Meanwhile, home prices posted their strongest showing since the onset of the pandemic, with the average resale price up 11.9 percent over the same period last year to $930,869. June’s average resale price also rose 7.8 percent compared to May 2020.

TRREB President Lisa Patel said June’s positive numbers were a result of the region’s economy gradually reopening and pent up demand that was unleashed following more than two months of significantly diminished market activity.

“Before the onset of COVID-19, there was a great deal of pent-up demand in the market. This pent-up demand arguably increased further over the past three months,” said TRREB President Lisa Patel.

“We are still in the early days of recovery, but barring any setbacks, we should continue to see stronger market conditions in the second half of 2020 as households look to satisfy their ownership housing needs,” she added.

As market activity in the Toronto region plummeted through the second half of March and into May, both buyers and sellers appeared to uniformly step to the sidelines. Sales and new listings fell by similar degrees through the spring, allowing prices to remain relatively stable as a significant mismatch between supply and demand did not arise.

But as sales ramp back up, a lack of active listings may push prices higher, negatively impacting housing affordability in a market that many already find prohibitively expensive. In June, new listings rose by 2.1 percent over the previous year but active listings were down by nearly 30 percent compared to June 2019.

“It will be important to closely monitor housing market conditions as economic recovery continues in the second half of 2020 and into 2021,” said TRREB CEO John DiMichele.

“The persistent lack of listing inventory in the GTA understandably took a back seat to COVID-related issues in the short term, but supply should once again be top-of-mind once the recovery takes hold, in order to ensure long-term affordability in the GTA,” he continued.

In mid-March, Ontario declared a state of emergency due to COVID-19, and within three weeks, the Bank of Canada cut the overnight interest rate to a decade-low of 0.25%, and half a million homeowners deferred their mortgages. As expected, many buyers and sellers suspended their home searches and sales in response to public health and safety measures, and uncertain economic conditions.

To understand how market activity and housing competition conditions for detached properties evolved during Ontario’s state of emergency, tracked sales and new listing data from the Toronto Regional Real Estate Board on a biweekly basis and compared the figures to 2019 activity for the same timeframe.

found that after hitting a trough in April, sales and new listings for detached houses in all five GTA regions rose steadily through May and June. In each GTA region (City of Toronto, Peel Region, York Region, Durham Region and Halton Region), the gap between 2020 and 2019 sales was widest between early April and early May, with sales dropping by as much as 75%. In every region, the extensive sales gap started to close by the latter half of May, and by mid-June, sales even outpaced 2019 levels for the same period in some GTA markets like Halton and Durham.

In June, new listings recovered to at least 75% of last year’s levels in each GTA region. This followed a steep drop in listings between early April and early May in every region; as low as 26% of 2019 levels in York Region, where new listings were most impacted.

also calculated the sales-to-new-listings ratio (SNLR) in each market to get a sense of whether competition for detached houses was balanced, or to identify regions where competition conditions favoured buyers or sellers. SNLR is calculated by dividing the number of sales in a period by the number of new listings.

Prospective home buyers and sellers should keep in mind that our analysis covers trends at the regional level. Buyers and sellers will benefit from a more in-depth review of sales and new listings trends to uncover nuances for specific home types of interest at the city, town or for neighbourhood level.

Competition for City of Toronto Detached Housing Balanced; June Sales Recover to 87% of 2019 Levels

After hitting a low point in April, sales for detached houses in Toronto began to recover through May and June. For the period between June 8-21, sales for detached houses in the region recovered to 87% of sales during the same period last year, providing a strong signal that more home buyers are gaining confidence and returning to the market.

Similarly, more sellers began listing their homes in May and June, with 862 new listings added between June 8-21, alone. This was 3% more than the number of detached homes listed between March 2-15, which were the last two full weeks before Ontario declared a state of emergency. The volume of new listings between June 8-21 reached 81% of 2019 levels; a striking contrast to the weeks between early April and early May when new listings were only at 30% of last year’s volume.

With sales and new listings rising at the approximately same pace, the detached house market in Toronto was in balanced territory in June with an SNLR of 47% for the June 8-21 period, compared to 45% for the same period last year. A balanced market occurs when the SNLR is between 40-60% and indicates that there was enough available supply to meet buyer demand.

 

Peel Region Reverts to Balanced Conditions for Detached Houses After Experiencing a Buyer’s Market in Late March and Early April

Between June 8-21 this year, 701 detached houses were listed in Peel Region, signifying a recovery to 88% of new listing levels for the same period in 2019, and marking the highest number of new listings hitting the market since the provincial state of emergency was declared. While not quite at pre-emergency figures just yet, there was steady growth in listings throughout May and into June.

Home sales followed a similar pattern – after reaching a low point between March 30 – April 12 with only 97 transactions taking place, sales picked up and are now at 89% of 2019 levels, and 10% lower than the level of sales during the two full weeks prior to emergency measures being announced (March 2-15).

Despite COVID-19, housing competition in the Peel Region was balanced in June 2020. Peel Region had an SNLR of 53% for June 8 – 21 this year, unchanged from last year, and 49% between March 2 – 15, 2020. As such, competition experienced by buyers active in the market this June was similar to what buyers experienced in June last year, and also to what buyers experienced as the spring market was ramping up this year, pre-emergency.

York Region More Competitive Than 2019 For Buyers As Detached Sales Recover to 95% of Last Year’s Levels

“There seems to be a resurgence in demand for York Region detached properties due to the pandemic,” said Claudio Castro, a agent in York Region. “As more people recognize that they may not need to be in the office 5 days a week for the foreseeable future, many are revisiting detached properties in the region so they can have more space.”

In 2019, York Region was in buyer’s market territory between March and June, meaning the SNLR was under 40% and buyers had more leverage as the available supply outpaced demand in the region.

For the same period in 2020, the market exhibited mostly balanced conditions, with the most recent biweekly period of June 8-21 at an SNLR of 46%. Sales were back up to 95% of 2019 levels during this two week period in June; recovering from a low of being at 28% of 2019 levels between April 13-26.

New listings improved over the course of May and into June in York Region, and were at 80% of 2019 levels for June 8-21 period. By comparison, between March 2-15, the last two full weeks prior to the emergency, new listings had been up 132% compared to last year.

Durham Region A Seller’s Market with Sales in June Outpacing 2019 Levels and New Listings Slower to Catch Up

In Durham Region, sales for detached houses were 8% higher than 2019 levels during the period between June 8-21 with 385 transactions taking place. These sales are comparable to the final two weeks pre-emergency, when 394 detached houses changed hands. Sales were at their lowest point between March 30 and April 12, when the volume of detached sales was only 45% of 2019 levels across the region.

Despite strong demand from buyers, sellers were relatively less enthusiastic in the region. With 592 new listings posted between June 8-21, new listings were at 75% of 2019 levels for the same period. As new listings failed to keep pace with sales, Durham Region was a seller’s market between June 8-21 with an SNLR of 65%, compared to the same period last year when the Region was in balanced market territory (SNLR of 45%). A seller’s market – where the SNLR is over 60% – is one where sellers have more leverage because available supply is lower than the demand for homes during a period of time.

“With such low inventory in the region, the atmosphere is cutthroat,” said David Micek, a agent in Durham Region. “The majority of homes are selling in under 7 days, and clients waiting until the weekend often find themselves on the outside looking in with houses selling before they can even visit.”

According to Micek, by this time of year, bidding wars typically tend to taper off as listings increase. This year, however, low available inventory coupled with COVID-19 restrictions meant buyers needed to adhere to showing restrictions and offer nights among other criteria set by sellers.

Halton Region Detached Sales Overtake 2019 by 22%; New Listings Show Strongest Recovery Among GTA Regions

Halton Region showed the strongest sales recovery among GTA regions, with sales comfortably outpacing 2019 levels as of the period between June 8-21. 291 detached houses sold during this two-week period compared to 238 the year prior, a 22% increase y-o-y. Sales in the region now match pre-emergency levels; 287 detached houses sold between March 2-15 this year.

“After COVID-19, buyers and sellers are eager to move forward into their next chapter, and this translated into a surge in sales activity in the region once people became more comfortable with the emergency measures in place,” said Alex Kupiec, a agent in Halton Region.

New listings for detached houses nearly kept pace with 2019 levels, with 465 listings coming onto the market between June 8-21, reaching 90% of what was listed during the same period last year. However, strong buyer demand relative to limited available inventory meant that Halton Region nudged into seller’s market territory with an SNLR of 63% for the period of June 8-21. Buyers last year faced less competition for detached homes during this time period last year when the SNLR was 46%.

“A lack of listings since mid-March resulted in a backlog of buyers contending for a very limited amount of inventory,” said Kupiec. “For buyers in particular, there is currently almost a mindset of a delayed spring market; they are ready to make a move and compete.”

Methodology

Sales and new listings data were sourced from the Toronto Regional Real Estate Board (TRREB) on June 25, 2020. Sales numbers for each biweekly period are based on the sold date.

New construction home sales in the Toronto region have hit the lowest level for May since 2000, down 81 per cent year over year, according to the home-building industry association.

It’s not clear how long the disruption will continue, said David Wilkes, CEO of the Building Industry and Land Development Association (BILD).

It took more than four months for the industry to bounce back from the 2003 SARS crisis, and that didn’t have nearly the impact that COVID-19 has exacted, he said.

The 866 newly built and pre-construction homes sold last month included 438 single-family dwellings — town houses, semi-detached and detached houses — 55 per cent fewer than May 2019. The 428 condos that were sold represented an 88 per cent year over year drop.

Single-family house prices remained flat at $1.11 million. But condo prices continued climbing 26.4 per cent annually to $984,436 on average.

The sales were not surprising, “given that these are reflecting activity in May when we were certainly in a period of people being encouraged to stay at home,” said Wilkes.

“Sales centres weren’t available for people to visit and look at new product,” he said.

May’s single-family home and condo sales were 68 per cent and 80 per cent below the 10-year average respectively, according to industry figures provided by Altus Group. It said last month’s sales were the lowest since it began tracking the industry in 2000.

There are anecdotal signs that buyers are active again, but it will be another month before there are numbers showing how many consumers have returned to the market, said Wilkes.

Wilkes said the shortage of homes in the GTA going into the COVID-19 crisis will be exacerbated as the industry comes back up to speed, although that will be offset to some extent by delays in immigration and other newcomers arriving in the region.

“I think we are looking at a period of time from a construction point of view for a return to normal of at least six to nine months,” he said.

A recent survey of its members showed the majority of housing projects in the GTA are more than six months behind schedule as a result of supply shortages, COVID-19 safety measures on work sites and approval delays.

Canadian real estate kicked off 2020 with a bang, but there are conflicting opinions as to how we’ll finish out the year. Canada’s federal housing agency has warned that average house prices could fall by up to 18 per cent over the next 12 months – a dismal prediction that’s being challenged by RE/MAX based on market activity from coast to coast.

Basic economics has taught us that supply and demand dictates housing prices, and according to what RE/MAX brokers are reporting at ground level, housing inventory is down in many markets, demand is still high, and multiple offers are a common scenario. Assuming that demand continues its current course, Canadian real estate prices will likely remain relatively stable or experience a single-digit price correction at worst – which is a far cry from CMHC’s dire decline of up to -18 per cent.

Is Canadian Real Estate In Trouble?
Late last year, RE/MAX expected Canadian real estate prices to rise by 3.7 per cent in 2020. A few short months later, COVID-19 threw everyone for a loop. This week, Canada Mortgage and Housing Corp. (CMHC) has predicted that average home prices could decline anywhere between nine and 18 per cent in the coming year, due to the economic impacts of COVID-19. In addition, CMHC warns that mortgage deferrals could rise from 12 to 20 per cent by September, with up to one-fifth of all mortgages ending up in arrears, if the Canadian economy does not recover sufficiently.

“The resulting combination of higher mortgage debt, declining house prices and increased unemployment is cause for concern for Canada’s longer-term financial stability,” CMHC CEO Evan Siddall told the House of Commons Standing Committee on Finance earlier this week.

However, the Big Banks, economists and many Realtors aren’t aligned with CMHC’s expectation.

What the Big Banks are Saying About Canadian Real Estate
According to this recent article published by The Globe And Mail, CIBC said Canadian real estate prices could fall between five and 10 per cent this year compared to 2019. Similarly, RBC forecasts a decline of seven per cent, while BMO expects a five-per-cent decline.

“[Mr. Siddall] said that all these things will happen if the economy ‘does not recover sufficiently.’ That’s a very broad statement,” CIBC deputy chief economist Benjamin Tal told The Globe And Mail. “Without looking at the assumption behind that statement regarding GDP growth, unemployment rate and so on, it is very difficult to assess the likelihood of such a prediction. Is it a worst-case scenario, or the base case? I think he was highlighting a worst-case scenario,” he said.

A single-digit decrease in house prices can be classified as a correction, and is a far cry from CMHC’s trough of -18 per cent.

RE/MAX Brokers Report Low Housing Inventory, Multiple Offer Scenarios
RE/MAX brokers in some of the biggest Canadian real estate markets say a dramatic price drop is unlikely under current conditions, barring any major unforeseen circumstances – and as we’ve all come to learn recently, anything is possible. But assuming current market conditions remain stable, the current inventory of homes for sale continues to fall short of demand – even amidst this pandemic, social distancing measures and the economic fallout.

Here’s what RE/MAX brokers are reporting on Canadian real estate in some of our biggest cities and key housing markets.

ATLANTIC CANADA

Newfoundland real estate has been a consistent “down market” since 2014, thanks to weakening oil prices and a shaky local economy. COVID-19 dealt another blow, but even so, the economy was already slow in the region. Interestingly, RE/MAX reports a spike in multiple offers in the region recently.

Multiple offers have been virtually non-existent in Newfoundland since the peak in market activity in 2014. Since the pandemic, there have been a dozen. There has even a home for sale that received four offers, when previously even one offer may have been uncommon.

Housing prices in Newfoundland remain consistent right now, and the market is better positioned than originally anticipated. The pulse is good, and this is unlikely to change in the near future.

Halifax real estate was riding high before the pandemic, with a lot of good foundational activity happening across the region. Simply put, the Halifax real estate market was hot, with low housing inventory common across the marketplace. Specific to the Halifax housing market, multiple-offer scenarios continue to be common, with brokers and agents reporting sequential multiple offer scenarios on their last three, four, five deals. That’s certainly the making of stable house prices, or even increasing slightly.

About one-third of Halifax listings in recent weeks have sold over asking price, which bodes well for house prices in the near future. Showings are up, and new listings that are coming online are up slightly as well. There’s consumer confidence, but buying activity is heavily dependent on how people have been affected financially. If current trends continue, an 18-per-cent drop in home prices is highly unlikely.

ONTARIO

Ottawa real estate has experienced an increase in home prices and a decrease in days on market – both good indicators that the housing market is stable, at least for the time being. The current seller’s market is characterized by low housing supply and high demand, which continues to drive up prices. In fact, within the last two weeks, Ottawa’s list-to-sales-price ratio has a median of 100 per cent. Most properties are still holding offers, with multiple-offer scenarios a common occurrence and homes selling for over asking price.

Within the last two weeks, compared to the previous two weeks, RE/MAX has experienced an influx of inquiries regarding properties for sale, with questions about the process of buying/selling homes. Consumers in the region want to be informed again about the housing market.

Toronto real estate is experiencing a proportionate decline in new listings and buyers, leading RE/MAX to conclude that prices should remain stable. Toronto homes are currently selling for asking price, or slightly above or below that price point, but the region has not experienced any decline in price and if current conditions continue, there’s nothing to indicate that prices will fall between nine and 18 per cent, as CMHC has predicted.

Toronto continues to experience multiple-offer scenarios, with RE/MAX reporting a consistent two or three offers on every listing. These conditions were prevalent prior to the lockdown on March 13, and continue to be the case, even with social distancing measures in place and the economic fallout. Toronto’s housing supply shortage continues, and demand remains high, as evidenced by the many multiple offers RE/MAX is seeing across the board.

The pandemic has negatively impacted listings, because many homeowners who were planning to sell are now opting to hold on to their listings, unwilling to host traditional open houses at this time. When government financial aid runs out and the six-month mortgage deferral period expires, people may then start listing their homes if they can’t afford to keep them. However, right now this is not the case. If a flood of listings does occur in Toronto this fall, it will be a short cycle.

London real estate experienced a large downturn in the number of sales in April and May compared to April/May 2019, but the region has also seen a large decrease in the number of listings compared to last year, which is causing multiple-offer scenarios.

The London housing market is holding strong, homes for sale are being scooped up and prices remain relatively stable. Within the past 14 days, RE/MAX reports 180 firm sales, 83 of which went for over asking, and 20 sold at full price. In April 2020 the average sale price in London was up slightly by a couple of thousand dollars compared to April 2019, however May’s month-to-date average price in London is about $29,000 higher compared to all of May 2019.

WESTERN CANADA

Edmonton real estate continues to experience a significant hit to its local economy due to oil prices, and the biggest factor going forward will be employment, or lack thereof. The impacts of COVID-19 may result in a double-digit unemployment rate, which is expected to impact housing demand.

When it comes to selling prices, RE/MAX reported some lowball offers at $40,000, $60,000 and $80,000 below asking, however none of those deals went through. Since then, those properties have gone pending close to the asking price.

Moving forward, RE/MAX expects an average five-per-cent price decrease in Edmonton throughout the rest of the year. Edmonton saw prices fall two to three per cent in 2019, based on buyer demand. Edmonton has more millennials than baby boomers, which makes it a unique marketplace. Buyers wants new homes, which means many dated homes in older neighbourhoods aren’t moving, while infill and new construction in those neighbourhoods are in high demand. Furthermore, RE/MAX is reporting an influx in downsizers who are using COVID-19 as the catalyst to sell the big house and move into a condo or smaller home.

Multiple offers are common in Edmonton’s housing market, with houses selling for $20,000 to $30,000 over asking price. This is due to buyers shifting and adjusting needs. This could present a good opportunity for investors and house flippers to tackle some of those older, larger homes.

Lenders tightening up their lending policies is a concern for the Canadian real estate economy, and how they assess and react to buyers’ employment status will affect the buyer pool. This will dictate the market in the next year post COVID-19.

Calgary real estate is experiencing a double-edged sword, due to COVID-19 and the oil industry, and the greater concern is oil. It is still too early to accurately predict where prices will trend in the coming year. Housing supply has come down, which has kept prices relatively steady. RE/MAX reports some multiple offers on properties that are priced appropriately in the right neighbourhoods. Meanwhile, some properties have seen large price drops, but it’s unclear if that is related directly to the pandemic or if it is related to the overall economy.

Some regions in Calgary are experiencing drops, but others are doing well. A five-per-cent price correction is a more likely scenario. Some price adjustments are happening already, but an 18-per-cent price drop across the board isn’t realistic. But if by chance it did happen, prices would bounce back again. Higher-priced properties will be most affected, while properties at lower price points are expected to remain fairly stable.

Vancouver real estate is fluctuating from week to week, not just on seller side but also on agent side as well. People are re-emerging, with RE/MAX reporting lots of new inventory and many multiple offers, not just on $500,000 condos but those priced in the $2-3 million range as well. and. Perception is that now with easing of restrictions, people are more confident that things are moving in the right direction.

It’s possible to have high unemployment, yet a very strong real estate market. Unemployment appears to be having a greater impact on lower earners, and with the region’s high real estate prices, homebuyers are typically those in the higher income bracket.

Vancouver Realtors who were initially fearful are back in business, and an 18-per-cent decline in Vancouver housing values – or anything close to that – is highly unlikely. A five-per-cent price correction is more likely.

A revised application submitted to the City brings changes to a proposed residential tower at 7 Labatt Avenue near Queen and River streets on the east side of Downtown Toronto. Developers TAS and Tricon resubmitted plans for the project in late 2019 with a new design by HOK, which has evolved in the months since.

The most recent update is a mid-May, 2020 application seeking Site Plan Plan Approval following a Minor Variance Application prepared in December to address certain items flagged in the last submission’s zoning review. The proposal generally remains in accordance with site-specific by-laws adopted by City Council at the end of 2016, and the current revisions make minor changes to the exterior design, unit count, and other elements. At ground level, a focal point of the revisions is the improvement of the building’s relationship with pedestrian and cycling infrastructure.

In response to comments from Planning staff, the exterior design has been refined in the updated submission. The number of balconies has been reduced and balcony depths have been minimized. The resulting re-positioned balcony placement and revised balcony cladding helps to create more variety on the exterior, revealing more of the primary building envelope. City staff’s request for a material sample board following the previous submission has been addressed, showing a mix of cladding that includes brick-faced precast panels with blends of red and beige brick, white precast concrete, bronze anodized aluminum, and double-pane low-E glazing for punched windows.

The minor variance is being sought in exception to a zoning by-law, reflecting a few elements of the project that don’t fully conform with the site-specific by-laws. Among these, the current plan’s tower width above the 28th floor slightly exceeds the accepted conditions. Another variance request is to permit only 209 parking spaces, in exception to by-laws requiring 270 spaces for a project of this size.

The previous plan called for 252 rental units and 295 condominium units, since revised to 257 rentals and 301 condo units. The overall unit mix has been revised to comply with a requirement that at least 20% of all units on the site must have two or more bedrooms, and a further 10% to have three or more bedrooms. The current unit mix is now proposed as 26 studios, 314 one-bedrooms, 152 two-bedrooms, and 66 three-bedroom units.

Other revisions include changes to the residential common and amenity spaces, most notably the separation of condo and rental amenities and the allocation of independent lobby spaces for the two tenure types. Specific amenities have been relocated to allow more natural light, while the types of amenities has been refined. An element of the building’s proposed Salvation Army space has also been revised, with a previously-proposed outdoor terrace now planned as an enclosed sunroom space for maintenance and noise-mitigation purposes.

You can learn more from our Database file for the project, linked below. If you’d like to, you can join in on the conversation in the associated Project Forum thread, or leave a comment in the space provided on this page.

You’ve checked listings, scouted your favorite neighborhoods, compared market prices and even picked the perfect shade of blue for your future kitchen. It’s safe to say you’re ready to become a homeowner.

While purchasing your first home is one of the most exciting experiences you’ll ever have, it can also be extremely daunting, especially if you’re not sure where to begin. To make things easier, we’ve put together a list of steps to help you get started in the right direction.

Step 1: Take a Look at Your Finances
Before scheduling any house tours, you’ll want to do a thorough assessment of your finances, so you know exactly how (and if) you can pay for that dream home. “Buying a house is a major commitment, which means the person should feel that their job is secure, they must have sufficient financial resources for the down payment, and a few extra months of reserve funds, just in case there could be some disruption in their life,” says Lawrence Yun, Chief Economist and Senior Vice President of Research at the National Association of Realtor (NAR).

Most people can’t buy a house out of pocket, so you’ll likely end up getting a mortgage to finance your purchase. You’ll need some savings to cover the down payment, the closing costs, and third-party fees associated with this type of loan. Your down payment could be as low as 3% of the total loan amount or as high as 20%. Closing costs and third-party fees, such as home inspection, flooding certificate, appraisal, title search, courier and attorney fees, could amount to up to 5% of the total loan amount.

Additionally, as of 2018, the average yearly cost of owning a home in the US was between $12,000 and $18,000. Although these numbers may seem insignificant compared to your yearly rent, they only take into account basic expenses, like utilities, property taxes, and insurance.

So make sure you factor in all of these things, in addition to other miscellaneous expenses, like repairs, maintenance and — depending on the neighborhood you live in — homeowners association fees, to determine whether you’re financially ready to take this step.

Step 2: Check Your Credit
You’ll need a minimum credit score of at least 620 to get approved for most mortgages, unless you’re applying for a government-backed loan, or for some special program provided by the lender. Your credit score will also play a big role in determining your interest rate: the lower it is, the higher your interest rate will be.

Besides that, most lenders require you to have a debt-to-income ratio (DTI) of no more than 43%, although 36% or less is preferred. The DTI is what measures how much of your monthly gross income is compromised after taking into account your current financial obligations, like credit card and student loan payments.

Pulling up your credit report will allow you to get a clearer picture of your outstanding debts, payment and account history. This should help you determine whether it’s the right time to apply for a loan or if you should pay off some debt first.

It’s also worth noting that your credit report won’t include your credit score, only information about your financial history. Your credit score is calculated by your lender, since each creditor uses its own credit scoring model — but there’s common ground on how they choose which score to use.

“Each borrower has three scores: one from Experian, Equifax and TransUnion,” says Matt Jolivette, a Certified Mortgage Consultant and Owner of Associated Mortgage Brokers. “The lenders usually take the middle score, so if someone has a 700, a 720 and a 740, the lender is going to use the 720 one.”

If you’re planning on taking out a mortgage with a spouse or a partner, the lender then compares both middle scores and chooses the lowest one, so it’s something you should be aware of if you’re thinking about buying jointly.

Step 3: Learn the Lingo
Getting to know the house-buying lingo can be quite tedious — after all, most of us would rather jump straight to the fun stuff, like actually looking at places, than sit and debate about interest rates, DTIs, and credit scores.

Still, knowing a few keywords can help you choose the right financing option for you, so here are some of the most important ones you’ll encounter throughout the home purchase process:

  • Term: this is the length of the mortgage, or for how long you’ll be paying it. It usually ranges from 10 to 30 years, depending on the lender.
  • Annual percentage rate (APR): some people confuse it with the interest rate, but this number — which is expressed as a percentage — actually combines the interest rate, points, and lender fees. When shopping for mortgages, this is the number you need to pay attention to, as it reflects the actual cost of the loan.
  • Fixed-rate mortgage: with this type of loan, the interest rate remains the same from start to finish.
  • Adjustable-rate mortgage (ARM): also known as a “variable-rate mortgage.” With this loan, the interest rate is fixed for a number of years, then turns into a floating rate for the remainder of the loan.
  • Conventional loan: this type of mortgage isn’t guaranteed by any government agency and usually has a fixed term and interest rate.
  • Government-backed loan: these are insured by the government and offer benefits, like lower down payments or full financing, and have a different set of requirements. Government-backed loans include VA, USDA and FHA loans.
  • Jumbo loan: these are mortgages that exceed the limits established by the Federal Housing Finance Agency (FHFA). They can be for as much as $1M depending on the lender, and require higher credit scores, income and down payments than conventional loans.

Step 4: Check for Federal, State and Local Programs
One of the best things about buying your first home is that you may be eligible for different programs that can facilitate your transition into homeownership and offer everything from flexible requirements to assistance with down payments and access to affordable housing.

Here are some of the federal programs that you may qualify for:

  • Federal Housing Administration (FHA) loans
  • Homeownership Vouchers
  • HomePath Ready Buyer
  • Good Neighbor Next Door
  • The Indian Home Loan Guarantee

Programs like the FHA loans and HomePath Ready Buyer allow you to qualify with credit scores lower than 620, and you could purchase a home with a down payment as low as 3%. The Homeownership Vouchers provide subsidies for low income individuals looking to purchase property.

The Good Neighbor Next Door program offers up to 50% off on qualified home listings for those working in careers that can revitalize communities, like teachers, first responders, and police officers. The Indian Home Loan Guarantee offers down payments as low as 2.25%, plus flexible underwriting to American Indians, Alaska Natives, and other federally recognized tribes.

Also: If you have an IRA, you can withdraw up to $10,000 without incurring any penalties for the purchase of your first home, in addition to applying for other state and local programs.

Step 5: Get Pre-Approved
Fact: not getting pre-approved before checking out houses is a rookie mistake. “We always recommend you get pre-approved. This allows us to look at your income, assets, and pull up your credit, to make sure you’re all buttoned up,” Jolivette says.

Getting pre-approved not only saves you time, but can also narrow down your choices and spare you the disappointment of falling in love with a piece of real estate that’s out of your price range.

In order to get the best term and interest rate for your situation, do research by comparing quotes from multiple lenders. Getting pre-approved won’t hurt your credit, as lenders only do a soft credit pull for this process.

To get you pre-approved, you’ll need to provide the following:

  • A form of ID
  • Social security number
  • Up to two months worth of pay stubs
  • Copies of your two most recent W-2s and tax returns
  • Statements of assets (certificates of deposits, savings, or any other investments).

Filling out the pre-approval form will only take a few minutes and, depending on the lender, you may be able to submit all the paperwork via email, instead of regular mail.

It can take lenders a couple of days to a week to get back to you. If you’re pre-approved, the lender will send you a letter stating the amount you’re qualified for. Having this letter at hand allows you to close faster and could also speed things up come time to persuade sellers to accept your offer.

If you’re unsure of where to start, MONEY has put together a list of the Best Mortgage Lenders of 2020, to help you choose wisely.

Step 6: Hire a Good Real Estate Agent
Once you’re pre-approved, the next step is to get in touch with a real estate agent. “Realtors can protect your interest and your investment,” says Diane Schall, a seasoned realtor at Ferrari-Lund Real Estate in Reno, Nevada.

Although you may check for listings online, these usually contain general information about the property, and could be outdated. “I get so many texts and phone calls from people looking at listings online, and sometimes the home isn’t even on the market, or it was already sold,” says Schall. “They just don’t give the consumer accurate information.”

The obvious benefit of hiring a real estate agent is that they’re knowledgeable about the market. They have updated information on listings that are within your price range, which can help you narrow your options. Additionally, they can give you in-depth details about the property, including things that would be hard to find on your own, like homeowners association fees and history of insurance claims. This can be a serious advantage for you, as it can help you negotiate a better price.

Real estate agents can also tell you things to watch out for, so you get the full picture of what you’re getting into. “I always point out everything that I possibly can, so they are aware. Like, ‘Look there’s a gap in the flooring, or there’s a water leak in the ceiling,’” says Schall. “I treat people like they’re my friends and family. I’m not gonna just sell a home just for the money, it’s about building lasting relationships,” she adds.

On average, real estate agents charge a commission fee that’s between 5% and 6% of the home’s final sale price, but they can also charge a flat fee. This fee is negotiable, and agents don’t get a single penny until the purchase is finalized. However, it should be noted that this fee is paid by the seller.

Step 7: Consider the Location
When looking at houses, a lot of people consider things like commute, whether the property is in a good school district, hospital proximity, and if there are plenty of restaurants and entertainment options nearby.

While these are all valid things to consider when searching for the ideal home, you should also take into account if that cute little house by the trees is a prime location for wildfires, floods, and other natural disasters.

According to the Insurance Information Institute’s latest data, the average American pays over $1,200 a year on homeowners insurance premiums. However, the price of premiums varies greatly from one location to the next. For example, the average annual premium paid by homeowners in Louisiana was $1,968 versus $829 in Arizona. This is due to the fact that Louisiana’s properties are more exposed to hurricanes and other natural disasters than those in Arizona.

If you purchase a home in a high-risk area, you may have a harder time getting insurance, and if you do, chances are it’ll be much more expensive, so it’s something to consider before you buy.

Additionally, if the house is close to a highway or any busy main roads, it’s possible that it’s resale value may be affected, since potential buyers can cite noise, pollution and lack of privacy as valid reasons to offer you a lower amount than your asking price.

Step 8: Make an Offer
So, you’ve finally found that special place that’s going to put an end to your renting days. Guess what? Three other buyers seem to share your good taste. This is when a good offer letter comes in handy.

Your real estate agent will most likely help you with this step, but here are some of the things that are usually included:

  • Purchase price – this is how much you’re willing to pay for the property.
  • Earnest money amount – also known as an “initial deposit,” this is separate from the down payment, and shows sellers you are serious about purchasing the property and it’s usually 1% to 2% of the property’s value.
  • Copy of the pre-approval letter from the bank or financial institution – to show the sellers you’re approved for funding and are ready to close.
  • Closing details – this includes information about the costs you’ll be responsible for, as well as those you expect the seller to cover.
  • A list of contingencies – these are deal breakers that would make the offer void, or a list of things that need to be in place for the offer to be valid. A home inspection can shed light on some of these, like for example, if there’s exposed wiring, you can ask the seller to fix this before you move in, as a condition for the purchase.
  • Expiration date – at the end of the letter, you must include a deadline for the seller to respond to your offer, as this helps to get things moving. Some states, like California, give sellers up to three days to respond to it, but this can be flexible. In most cases, sellers respond within 24-48 hours after receiving the offer.
    Yun also recommends including an emotional appeal within your letter stating the reasons behind your intent to purchase. “They should express whether they are a family raising a kid, and are looking for a good school district, or if they just have a certain connection with that particular house,” says Yun, noting that your chances could certainly increase by taking this route. “They want the next buyer to be somebody they can relate to, and that takes care of the home,” he adds.

If the seller accepts your offer, the next step is to send the purchase contract to the lender, so they can schedule a closing date and get everything in place for funding.

Step 9: Get an Inspection
The home inspection takes place once your offer is accepted, to ensure the house you’re purchasing is safe. Some of the things inspectors look for are faulty or exposed wiring, poor ventilation, roofing problems, mold, presence of rodents or other pests, and plumbing issues. The inspection process takes 3 to 4 hours to complete, depending on the size of the property, and it usually takes the inspector a few days to a week to complete the report.

The seller is required to inspect the property prior to listing it on the market, but it’s always recommended you also hire your own inspector, that way you know if the property is being sold at a fair price and if you’re getting your money’s worth.

Although inspections are commonly held after the offer is accepted, most buyers ignore that they can request a “pre-offer inspection.” However, they must be careful when doing so. The reason behind this is that requesting a pre-offer inspection could be seen as a sign of distrust from the seller’s point of view, which could lead them to reject your offer.

In Jolivette’s opinion, it is best to schedule inspections after making an offer. “We always recommend folks do get a home inspection once their offer has been accepted,” says Jolivette. If something seems off during the inspection process, you can always get the seller to make the adjustments prior to closing, or ask them to lower their price.

Step 10: Get Ready to Close
Closing is the final step in purchasing a home, and is when you sign all of the remaining paperwork to become the legal owner of the property. This happens between 30 to 45 days after your offer is accepted and your lender receives the purchase contract.

A day before closing, your real estate agent will schedule a final walkthrough to see that everything in the property is the way it should be for final approval. Some of the people you can expect to see at the closing are your real estate agent, a closing attorney, escrow officer, home inspector, a title insurance agent and the loan officer, in addition to the seller.

At closing, you’ll be asked to bring the following:

  • A photo ID to verify your identity
  • The copy of the purchase agreement
  • A cashier’s check or a certified check to pay for the down payment and remaining closing costs and fees
  • Proof of insurance

The actual process can take a while, since you’ll have to sign a lot of documents, including the deed of trust or mortgage, promissory note, and a closing disclosure. Yun advises to review these documents carefully, to avoid any unpleasant surprises.

“Closing is just the validation of all the expectations, so there should be no surprises. Everything should be as negotiated,” says Yun.

After everything is signed and validated, the title is transferred under your name, and you officially become the legal owner of the house. Next step: get your keys, and start packing!

Owning approximately 3,500 acres of land at prime intersections in all provinces across the country, SmartCentres REIT is pursuing an aggressive expansion of its SmartLiving residential sub-brand, diversifying and optimizing its portfolio through redevelopment of its vast roster of properties. A $12.1 billion development program announced in 2019 is now underway, and will see 94 of the 165 SmartCentres’ properties undergo intensification. One of 256 individual development projects, SmartCentres Pickering will transform a 48-acre site at the intersection of Brock Road and Pickering Parkway, located just five minutes from Pickering GO Station.

The property is bounded by Brock Road to the west, Pickering Parkway to the south, a mature single-family neighbourhood to the east, and a service road to the north. Featuring easy access to Highway 401 and the Durham Live entertainment district, the existing Pickering SmartCentre contains a number of high-profile tenants, including Walmart Supercentre, Lowe’s, Winners, LCBO and PetSmart.

The lands were identified in the South Pickering and Kingston Road Corridor Intensification Studies for high-density mixed-use development, aligning with the principles and long-term growth strategy established by SmartCentres. Recognizing the changing landscape of retail, the REIT is taking a leadership role in extracting value and maximizing the potential of its assets, while contributing towards the urbanization of several GTA municipalities, including Pickering.

The first phase of the comprehensive multi-phase masterplan will see the northeast corner of Brock Road and Pickering Parkway—currently occupied by two standalone retail buildings separated by a surface parking lot—redeveloped into a two-tower residential project.

Official Plan and Zoning Bylaw Amendment applications have been recently submitted with the City of Pickering, seeking permissions to build 33 and 34-storey condominiums on the first six-acre lot, with heights of 106 and 109 metres.

Designed by Turner Fleischer Architects, the two towers will stand atop a multi-storey podium stretching the full length of the property. A total of 377 and 360 one-to-three-bedroom residences are proposed between the two buildings, with 14,500 ft² of retail space to be provided in the podium.

A total of 703 parking spaces have been proposed. An expansive amenities program will include a fitness centre, party room, guest suite, and an outdoor roof deck.

The remaining blocks within the 48-acre property will be developed in phases, allowing the bulk of the retail to continue operating as construction progresses. The lands to the immediate east, occupied by additional surface parking and three individual single-storey commercial buildings, comprise the remainder of Block 1.

You can learn more from our Database file for the project, linked below. If you’d like to, you can join in on the conversation in the associated Project Forum thread, or leave a comment in the space provided on this page.

Historical data from the late 1990s show a financial crisis is often followed with a steep increase in housing prices. If real estate grows in a similar manner as the 2000s, safe haven assets like gold and potentially Bitcoin may follow.

The housing market is projected to see a steep sell-off in the second half of 2020. The U.S., Japan, South Korea, Singapore, and other hot markets are struggling with declining demand.

Highly-populated markets like Makati, Philippines, which saw housing prices spike to record high levels in recent years, are also expected to see a 15% to 20% drop in value by the year’s end.

The medium-term trend of the housing market remains gloomy. But, a study shows that the next correction will mark the start of a strong housing market recovery.

A research paper published by the University of Granada and Federal Reserve Bank of Chicago read:

“During the late 1990s and up to 2007 several countries experienced sharp increases in house prices. These episodes are usually mentioned among the causes of the recent world’s economic and financial turmoil. The dramatic growth in bank lending during this period has been broadly held responsible for these market dynamics.”

The housing market tends to see an extended surge after a financial crash for two main reasons.

One, interest rates remain low for a relatively long period of time. It alleviates pressure from potential buyers in a cheap market.

Second, various forms of stimulus and government support are rolled out to lead economic recovery. Such efforts typically lead to increased appetite for real estate purchases over time.

Over the next six months, the Federal Reserve does not intend to hold back in stimulating the economy.

Fed chair Jerome Powell predicts the unemployment rate in the U.S. to reach 25%, a level unseen since the Great Depression in the 1930s.

Amidst highly pessimistic economic projections, economists are putting on the pressure on the U.S. government.

Nobel laureate Joseph Stiglitz said earlier this week in an interview with Bloomberg that the lacking government support can become worrisome.

Stiglitz said:

“What worries me is that there won’t be enough government support, people will say we spent so much money to save the airlines, we don’t have enough money to shape the economy that we should have going forward.”

The pressure that is being imposed by both economists and the general population for more stimulus will push the Fed to provide the economy with enough liquidity.

Following arguably the biggest financial crisis in over a decade, the Fed’s aggressive stance will likely result in high levels of bank lending. That will stimulate the housing market entering 2021, setting it up for a strong decade ahead.

The well-documented correlation between gold and housing market, and the growing perception of Bitcoin as a store of value among institutional investors may indicate that housing, gold, and Bitcoin will perform strongly altogether over the long-term.