,

2020 rates will likely remain at reasonable levels

This year, mortgage rates will most likely remain low and qualification will be easier, real estate information portal Zoocasa predicted.

Much of the impetus for these developments could stem from renewed calls to give the B-20 mortgage stress test another look, given the policy’s moderating impact over the past two years.

“In December, a letter from Prime Minister Justin Trudeau indicated Federal Finance Minister Bill Morneau will take a second look at the controversial test’s criteria, and potentially make tweaks to allow for more flexibility when qualifying borrowers,” Zoocasa stated.

And while the details have yet to be divulged, “this could include lowering the qualifying rate from its current 5.19%, or making it more dynamic based on individual borrowers’ profiles,” Zoocasa added.

“As well, they could remove the current requirement for borrowers to be re-stress tested when switching lenders, a measure that has drawn heavy criticism from the mortgage industry for discouraging consumer empowerment and competitiveness.”

This might continue a trend of Canadians paying for lower loan interest rates, which started becoming apparent last year, according to Bank of Canada data.

Between October and November, the effective interest rate went up by 0.27% to reach 3.70%.

“The rate is lower than [2018], but the longer-term movement is still towards higher rates,” real estate information portal Better Dwelling stated, noting that any recent declines have been more than offset by the gains seen over the previous years.

“[In 2018], rates during the same week were up 14.53% from a year before. The year before that, they increased 14.29% from the year before. Overall, rates are 9.79% higher over the past 5 years,” the analysis added. “Before 2018, you would have to go back to 2011 to find rates this high.”

/by
,

Developers answer the call for housing outside downtown core

Housing affordability is a significant conversation that is taking place across the country, especially in high-density, urban cities. Even as the risk profile for Toronto and Vancouver housing markets have come down to “moderate” levels, the fact remains that the demand hasn’t gone away, and that means that prices are remaining out of reach for many people.

British Columbia in particular, is seeing more people choose to live outside of the Vancouver core or being compelled to live in surrounding regions to find appropriate housing. Their demands, however, haven’t changed: they want to live in convenient locations that are close to shopping centres and transit, even as they move beyond the downtown area. This means that developers are having to think outside the box of the single-family suburban norm.

Many of these areas lack a lot of options when it comes to housing, and people are increasingly demanding more variety in developments in order to meet their needs.

Hari Homes is a developer in British Columbia that is catering to this shift in demand. Their recent revitalization project, Chalet, is meant to increase density in Delta, B.C., in order to keep young families in the area. With Chalet, they didn’t want to build towers, but instead wanted to create something that would compel various swaths of the community to take advantage of the units.

The development plan includes units that range from 491 square feet up to 1,300 square feet and sidewalks that connect the community to local schools and amenities. They are particularly paying attention to affordable units for first-time buyers who are struggling to find other options in the area, given that a single-family home in Delta are older and still at least $900,000, said Aloke Chowdhury, managing director of Hari Homes. This puts them out of reach for a lot of middle-income buyers, such as people who are newly married or who have small families.

“The thing you have to understand is that the land prices are going up day by day,” Chowdry said. Hari Homes bought the land for Chalet five years ago and began work in 2017, but if the land had come available today, Chowdry expects it would be three times more expensive. From a developer’s perspective, he continued, “if they don’t make the small units, they would not be able to provide affordability to the people.”

According to a report published last year by GWL Realty Advisors (GWLRA), neighbouring suburbs of Toronto and Vancouver have seen substantial growth and demand overflow because neither city has added sufficient housing to account for recent population growth.

GWLRA is specifically building new rental housing in both cities, with over 4,000 units in the development pipeline in Toronto.

“Young families migrating to outlying areas is driving rapid population growth in these markets—along with retail demand as this is a prime spending demographic. GWLRA continues to seek grocery-anchored shopping centres in these fast-expanding nodes and recently purchased Sumas Mountain Village in Abbotsford as part of this strategy,” writes Wendy Waters, vice president of research services and strategy at GWLRA.

“We are running out of land, people have to understand that,” Chowdry said. “I have gotten some resistance in this neighbourhood that this neighbourhood will be ruined, or that traffic will be creating more chaos with the hi-rises coming. We cannot control the traffic, because the population growth is there.”

New immigrants are supporting population and housing growth in Canada, and big cities are obvious choices for those new to Canada.

Developers and municipalities are increasingly having to come together to figure out plans for new projects that may have previously not been considered, particularly in high-demand cities. Chowdry says that all of the local cities in the lower mainland—Vancouver, Richmond, Burnaby, New Westminster—are intensely focused on planning ways to create more affordable housing options available.

That includes rentals as well; Chowdry says that developers are being encouraged to come up with more rental housing solutions than they would’ve considered in the past.

/by
,

2019 is officially one of the biggest years ever for Toronto’s new condo market

It didn’t look like it was meant to be a banner year for Toronto’s new condo market as sluggish activity marred the early months of 2019. But after a spring awakening that was followed by a string of strong months for new condo sales, the year has now earned the distinction of one of the Toronto market’s strongest ever.

In a media release published Monday, Patricia Arsenault, executive vice president of Altus Group, named 2019 as one of the best four years ever for Toronto new condo sales as the real estate consultancy shared its November market data.

“After a slow first quarter, new condominium apartment sales in the GTA have shown impressive resiliency since the spring,” said Arsenault in a joint media release with the Building Industry and Land Development Association (BILD). “With one month still to go, 2019 has already earned a spot among the top four years ever for new condo sales.”

She also noted that November was busier than usual for the GTA new home market, with 4,720 total new home sales for the month, up 53 percent from a year ago and 19 percent higher than the 10-year average for November.

While the new condo market obviously had a strong showing — with sales up 32 percent versus November 2018 — it was the new single-family home market that decisively beat out its 2018 total, rising 207 percent year-over-year. Over the last few years, the single-family home market has been characterized by weak activity that has sunk lower and lower with each passing month.

Those in the industry argue that there’s plenty of demand for the housing type, but government policies rolled out over the last decade have increasingly favoured high-rise development and made it more challenging to bring new single-family home projects to market.

In November, there was clearly an uptick in supply brought to both the condominium and single-family home markets. However, that wasn’t the only reason sales have continued trending upward since the spring.

“We are seeing robust demand for new homes, and with a healthy economy and continued low interest rates, that demand is likely to continue strong into 2020,” said David Wilkes, BILD’s president and CEO. “We need to keep our focus on increasing housing supply to ensure that housing prices remain stable and that our sector continues to be a source of good jobs and a driver of economic growth.”

/by

The Average Home Price In The GTA Crept Closer To $1M In 2019

The average selling price of a home in the Greater Toronto Area (GTA) in 2019 increased 4% to $819,319 according to a new report from the Toronto Real Estate Board (TREB), and those looking to enter the buyer’s market can expect prices to continue to rise in 2020 unless there is an increase in supply, the board predicts.

According to the latest report, residential sales in the GTA this past December were up by 17.4% year-over-year to 4,399, contributing to the overall total of 87,825 home sales in the calendar year. This is up 12.6% compared to the decade low of 78,015 sales reported in 2018.

 

While sales were up in 2019, the number of new listings entered into TREB’s MLS System was down 2.4% year-over-year. The report revealed that for the past decade, annual new listings were largely in a “holding pattern” of between 150,000 and 160,000, despite the upward trend in home prices over the same period.

“Taking 2019 as an example, we experienced a strong sales increase up against a decline in supply,” said Jason Mercer, TREB’s Chief Market Analyst. “Tighter market conditions translated into accelerating price growth. Expect further acceleration in 2020 if there is no relief on the supply front,” said Mercer.

According to TREB, the average selling price in December 2019 was $837,788 – up nearly 12% year-over-year. For the 2019 calendar year, the average selling price was $819,319, up by 4% compared to $787,856 in 2018.

 

For December, detached homes recorded higher price gains, up 11.6% in the month to $1.05 million as sales increased 26.2% from a year earlier. The average condo price was up 10.4% to $612,464, while sales were up 6.9%.

TREB said the increase in sales activity in the second half of the year was primarily due to a strong economy throughout the region and an overall decline in mortgage rates.

/by

Residential construction investment down in 6 provinces

There was a decrease in Canadian construction investment in October, the latest month of data released by Statistics Canada.

The agency says that total investment in construction was down 0.5% month-over-month to $15.5 billion with the residential sector down 1% to $10.6 billion while the non-residential sector gained 0.5% to $4.9 billion.

Residential construction investment was down in 6 provinces with Ontario posting the largest decrease ($129.6 million), its first decline for four months, while BC posted its first gain (up 5.3% to $1.9 billion) after 4-monthly decreases.

The decline for residential to $5.3 billion was the result of a 1% decline for single-family units and a 0.9% decline for multi-family.

Non-residential gains
Investment in the non-residential sector rose 0.5% to $4.9 billion in October with the commercial component leading with a 1.1% increase to $2.9 billion, largely due to increases in Ontario (2.0% to $1.0 billion) and British Columbia (3.8% to $546.9 million).

There were declines though for the industrial (-0.3% to $902.4 million) and institutional (-0.4% to $1.1 billion) components in October.

/by

Toronto is among the 10 most valuable ‘city brands’ in the world

Having a strong brand is vital for successful businesses but for cities it can enhance everything from investment to immigration.

A new report from Global City Lab has ranked the top 500 city brands in the world with more than 80% of them in North America, Europe, and Asia. Europe leads with 177 cities in the list, Asia has 151, and North America has 96, mostly in the US (66) but including one Canadian city in the top 10.

The brand values of major cities in each country are calculated based on six factors: economy, culture, governance, environment, talent and reputation.

Toronto is placed 10th in the list, joining Los Angeles (5th) and New York (1st) as the only North American cities in the top 10. Toronto’s brand value is U$773 billion, while top-placed New York has a value of $2.2 trillion.

Toronto recently announced a major new housing plan to grow the city’s households by more than 341,000 over the next decade.

A city brand needs several components including being able to tell a story in which local residents, government, and media share consensus. Global City Lab says that local governments are recognizing the importance of building a city brand and urban branding is becoming a promising public management tool.

 

/by
,

These are some of the best cities for real estate investment in 2020

Toronto and Vancouver are among the prime cities for real estate investment.

London tops the Global Prime Real Estate Securities Strategies rankings from real estate investment management firm Heitman LLC followed by New York, and Singapore.

Toronto ranks 11th while Vancouver is 24th.

Heitman’s Real Estate Securities Group compiles the list as part of the screening process it uses to identify cities and investee companies and REITs for potential inclusion in the firm’s Prime strategies.

“Our Prime strategy’s hypothesis is that ‘prime’ real estate markets around the globe are select in number and characterized by strong demand from tenants, owners, and consumers,” said Jerry Ehlinger, Heitman Senior Managing Director and Head of Global Real Estate Securities.

Ehlinger says that these gateway markets tend to be supply constrained both by high land costs and difficult permitting and planning regimes.

“As a result, ‘prime’ real estate assets in these markets are consistently in high demand from investor capital from across the globe due to locational advantage, prestige, attractive leases to credit tenants, stable income, and stable or increasing value but can also be difficult to access through direct investment,” he said.

European gain
While the US continues to boast seven cities, the most in the rankings for any single country, major continental European cities experienced the largest upward movement in the rankings.

The rankings are compiled using several metrics incorporating economic, trade, property human capital, and cultural and political characteristics.

“There were no changes to the composition of the cities included in our screening from last year’s rankings. However, there have been some significant positioning changes, partially resulting from relative economic developments, spillover impacts from Brexit, and an increased focus on sustainability in this year’s market update,” said John White, Heitman Senior Managing Director, Public Real Estate Securities. “New to this year’s ranking, we have also incorporated longer-term sustainability factors into our research to gain a better sense of how cities are adapting to a changing climate.”

Source: Heitman LLC

/by