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Bank of Canada Cuts Rate to 0.25% In Emergency COVID-19 Measure

The Bank of Canada (BoC) has made another unscheduled rate cut, slashing its Overnight Lending Rate by 50 basis points from 0.75% to 0.25% – the lowest it has been since April 2009 – as further response to the COVID-19 pandemic and its impact on the Canadian economy. It is the third rate cut the BoC has made in March, slicing a total of a percentage point from where it stood in February.

“The spread of COVID-19 is having serious consequences for Canadians and for the economy, as is the abrupt decline in world oil prices,” stated the BoC in a release. “The pandemic-driven contraction has prompted decisive fiscal policy action in Canada to support individuals and businesses and to minimize any permanent damage to the structure of the economy.”

A “Complimentary” Approach to Support Canadians
The BoC’s move today is meant to support the fiscal efforts of the federal government, which has been rolling out assistance programs for Canadians whose incomes have been impacted by COVID-19, either due to the need to self-isolate, job loss, or the need to stay home from work to provide childcare. By cutting interest rates, the BoC keeps the cost of borrowing low both for lenders and consumers, which helps keep the market liquid and spending moving during times of economic upheaval.

“The intent of our decision today is to support the financial system in its central role of providing credit in the economy, and to lay the foundation for the economy’s return to normalcy,” the BoC stated.

The BoC has also announced it will roll out two programs to keep funding flowing for small businesses and support overall economic recovery, by buying back Government of Canada bonds, securities, and other financial instruments.

Could More Interest Rate Cuts Be on the Way?
It appears the BoC may not be finished with its downward trajectory, strongly indicating that more cuts may come as the situation evolves. It will continue to closely monitor the economy in co-ordination with the other G7 banks. “Governing Council stands ready to take further action as required to support the Canadian economy and financial system and to keep inflation on target,” states its release. The move to cut has been made by central banks globally in efforts to shore up economies amid COVID-19, including the U.S. Federal Reserve, which slashed its own rate to near zero on March 16.

The BoC also stated it will release its full economic update in its next scheduled rate announcement, on April 15.

What Does This Mean for Mortgage Borrowers?
Think of the BoC’s Overnight Lending Rate as a benchmark – it is a basis used by consumer lenders, such as TD, RBC, etc. when setting their Prime Rate-priced products. This means whatever the BoC does will have a direct impact on variable-rate products, such as variable mortgages and lines of credit.

As a result, those with variable-rate mortgages will see either their monthly payments drop in tandem, or more of their payment going toward their principal debt and less towards interest.

Those currently locked into a fixed-rate mortgage term will not see their payments or interest rate affected by today’s announcement, though those getting a brand-new fixed-rate mortgage, or coming up to renewal or refinance, will likely have access to lower rates than compared to a month ago, as lenders take their cues for fixed-rate pricing from the bond market.

That’s because, in times of economic uncertainty, investor demand for “safe haven”investments such as government bonds, rises. That in turn causes bond yields to drop – they have an inverse relationship with investor demand, as the maturity payoff tends to be lower for low-risk investments. Investors are particularly drawn to bonds when the BoC’s rate is low, as it means whatever investments they purchase now will be at a discount, and unlikely to have their values lowered in the near future by a rate increase.

As of today, the Government of Canada five-year bond yield sits at 0.76% – a multi-year low.

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Bank of Canada battles coronavirus fallout with third rate cut

In an emergency announcement today, Canada’s central bank cut its market-shaping overnight rate by 50 basis points to 0.25 percent in response to the coronavirus pandemic’s dramatic impact on the Canadian economy and financial system.

This move was the third rate cut in the span of a month and the second emergency announcement the Bank of Canada has made within two weeks. While the cut is technically viewed as an “emergency” measure since it falls outside the Bank’s regularly scheduled rate announcements, it came as no surprise to economists who had widely anticipated the move.

Just earlier this week, the RBC Economics team noted that while the Bank of Canada had been quick to respond to the coronavirus pandemic, additional measures would be necessary and a further rate cut was all but inevitable.

Today’s cut brings the overnight rate to a level that matches the depths of the financial crisis of 2008-2009, down from 1.25 percent after just a few short weeks. While the Bank is working on a number of initiatives to support the Canadian economy during these volatile times, experts believe this will be its final rate cut in response to the pandemic and it will stop short of slashing the rate into negative territory.

“[Bank of Canada] Governor Poloz views this as the effective lower bound and is not likely to employ negative rates that the Bank thinks are harmful to financial markets,” wrote Oxford Economics’ Tony Stillo.

“This extraordinary monetary stimulus, in tandem with a still growing number of fiscal measures, are an absolute necessity to help offset the worst-case impacts from the pandemic shock on the economy,” he added.

The Canadian housing market is expected to see a significant slowdown in activity in the coming months with the first signs of the pandemic’s impact anticipated to be visible in the March sales data from markets across the country. That being said, the diminished number of those who do purchase homes during this time will likely see historically low mortgage rates being offered by lenders.

“Think of the [Bank of Canada’s] Overnight Lending Rate as a benchmark – it is a basis used by consumer lenders, such as TD, RBC, etc. when setting their Prime Rate-priced products. This means whatever the BoC does will have a direct impact on variable-rate products, such as variable mortgages and lines of credit,” wrote Zoocasa’s Managing Editor Penelope Graham in a blog post.

“As a result, those with variable-rate mortgages will see either their monthly payments drop in tandem, or more of their payment going toward their principal debt and less towards interest.”

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RBC accused of using COVID-19 to acquire assets at low cost

A real estate investment trust has alleged that RBC has used the COVID-19 coronavirus outbreak to acquire real estate assets at rock-bottom prices.

According to a Bloomberg report, a subsidiary of AG Mortgage Investment Trust Inc. claims that on March 23, RBC contacted it and said that the REIT’s mortgage-backed securities had seen a drastic decline in value due to the virus outbreak.

That meant the bank could require additional cash or securities. The REIT says that the valuations were not reflective of their true value.

The lawsuit says that RBC has not followed the actions of many other banks in not pursuing remedies against REITs.

The Bloomberg report cites a Wall Street Journal story that RBC has seized many commercial real estate debt seized from clients in recent days and will sell them to shore up finances.

RBC has not commented on the allegations, which have not been proven in court.

The case will be discussed Thursday in the federal court in Manhattan. The REIT is hoping for a block on RBC taking any actions on its assets.

The lawsuit states that selling the assets at auction “would not only dramatically and prejudicially underprice these securities to plaintiffs’ detriment, but would also likely precipitate a chain reaction of other banks being pressured to foreclose on other mREITs’ pledged securities, all at prices informed by the fire sale that defendants seek to hold.”

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Toronto home sells for $330k over asking amid coronavirus chaos

It’s an uncertain time for many. Amid the coronavirus crisis, borders have shut, flights have been downed and workplaces around the world are learning to adapt to empty desks as employees work from home. This week was so different from the last, and as new information flows in every minute, businesses have their eyes fixed on the market, attempting to predict what is still to come. It’s no different for Canada’s local real estate industry.

“Every hour is different. Last week, we sold two of our listings with bully offers well above list [price], every single property sold this year sold above list,” said Josie Stern, a sales representative with Sutton Group-Associated Realty’s Josie Stern Team. “In the last week, we thought this would be the last ‘hurrah’, because obviously [things] are changing, a changing world.”

Stern recently listed and sold a two-storey detached home in York’s Humewood community, 34 Kenwood Avenue. In excellent condition, with enough parking for three cars, and located a short walk from St. Clair Avenue West, the three-bedroom home didn’t last long on the market. Listed at $1,029,000, the property sold for $1,361,000 — $332,000 over asking — in less than a week after 71 showings and 10 offers, all of which were priced high.

“That area is still in very high demand,” said Stern. “It is getting more and more challenging getting people in the door, and so we have to adapt.”

A day after 34 Kenwood Avenue hit the market, listed on Tuesday, March 10th, the World Health Organization declared COVID-19 a global pandemic. Stern was still seeing a steady level of activity when she sold 34 Kentwood Avenue, following a prosperous level of sales that had been maintained since January. As of Monday, she says that the market hasn’t really changed, but the coming weeks could be a turning point as people are strongly encouraged to stay home and practice social distancing.

“Right now the market is in flux. We don’t really know what is happening or what is going on,” said Stern. “It’s as new to us as it is to everybody else. I guess you have to adapt to new ways of selling houses and condos with the people that have to move.”

As Stern explains, people still need to move, buy and sell homes. Social distancing places limitations on how real estate business is usually handled, through traditional methods like open houses and in-person offer presentations, but agents will have to change their ways.

“There are people who still want to go into the homes,” said Stern. “We’re very clear and very specific about social distancing, about using sanitisers, not to touch anything, keeping your distance, only one group at a time. But that limits you, so we are using a lot of electronic media.”

In addition to reaching out to her extensive network of buyers and sharing ideas with other professionals, Stern is also focused on keeping her clients calm and supported in their housing decisions during this time.

“The client obviously comes first, and trying to keep everyone healthy and adhere to social distancing. It’s a juggling act,” she said.

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Seventeen offers for compact Theatre District condo

Across from Roy Thomson Hall, one-bedroom suites at Theatre Park sold for $568,000 and $590,000 in June and July respectively. Months passed before a similar model – this 450-square-foot unit – was again available for sale and 140 potential buyers toured the property prior to the scheduled offer night early December.

“I sold the exact same plan a few months before – listed it low, held back offers and had multiple offers – so I saw the demand for that size, price point and location,” agent Alex Moloney said of the unit that sold for $568,000 to one of eight bidders.

“[For this unit], just the amount of showings we had was an indication I could expect more offers than we had before. But I wasn’t expecting 17.”

About five years ago, Lamb Development Corp. constructed a 47-storey tower with ultra-modern suites, such as this one-bedroom unit with exposed concrete finishes and nine-foot ceilings, as well as walls of windows and sliding doors to a 132-square-foot terrace with a gas hookup.

Frosted sliding doors separate the bedroom from entertaining quarters outfitted with two-toned kitchen cabinetry, quartz counters and upscale appliances, including a gas stove.

Monthly fees of $292 are allocated for water, heating, 24-hour concierge and common area upkeep.

“The quality of finishes are higher end in terms of the appliances, kitchen and countertops, and the amenities in the building as well with the pool and gym,” Mr. Moloney said.

“And the location is one of the best things it has going for it because it’s right near the subway, and close to the Financial District and Theatre District.”

 

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Here’s how Toronto renters feel about the new mortgage deferrals in Canada

Now that banks in Canada have announced that they will allow homeowners to defer their mortgage payments for up to six months in light of the current novel coronavirus pandemic, tenants are wondering why they still have to keep up with rent payments in a time that is financially precarious for most.

The concern is especially pressing in Toronto, where rent is a shocking $2,500 per month on average and many tenants’ rent money helps landlords to pay off the mortgages they may now no longer have to make payments on.

Some find it a bit counterintuitive that those who have been lucky enough to have the financial means to purchase a house — an option unavailable to most of us, especially in Toronto’s market — are getting a break, while many renters in Canada live paycheque to paycheque (and many paycheques won’t be coming in during our current state of emergency).

A few are going as far as to call it class warfare — such as popular social media account parkdalelife, which aptly tweeted: “working class people will continue supporting a capitalist class that amasses wealth through income from capital during mass layoffs and a global pandemic.”

There is the fact that those who defer their mortgages will eventually have to pay them off in full, while it may be difficult for landlords to retrieve deferred rent later on from a tenant who, say, moves at the end of their current lease agreement.

Still, the situation does feel unfair, and people have pointed out that it may lead to further evictions and cases with the Ontario Landlord Tenant Board.

Before the mortgage news broke, more than 400,000 people had signed an online petition calling for both rent and mortgage payments to be cancelled for all Canadians during this unprecedented time.

Though it’s good to see that some change on this front was enacted to ease many residents’ financial burden, a huge portion of the population is still worrying about how they will make ends meet in the coming months.

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Can the Tech Industry Help Save Toronto From its Housing Crisis?

Finding a stable, affordable and comfortable place to live is what Torontonians are after, Toronto’s Deputy Mayor Ana Bailão tells Toronto Storeys.

Bailão, who is also the city councillor of Ward 9, says “Housing affordability and affordable supply are the issues that concern Toronto residents the most.” And while Bailão says there isn’t a mandatory obligation for tech companies to create these options, she hopes that “tech companies will adopt a role in supporting the creation of affordable housing” working with the city and community.

Bailão points to investment, which tech companies can plug into the housing market to support the growth of the housing supply. Or tech companies could help build directly and explore new real estate strategies, creating places to house their workers after work too. After all, with investment also comes the ability to recruit high calibre talent to the city, and when they come they will require somewhere to live. But is it the responsibility of, say, Google or Microsoft, to handle employees’ housing situation in addition to delivering their paycheques?

According to the 2019 CBRE “Scoring Canadian Tech Talent” report, Toronto was the top ranked city when measuring tech availability to quality of labour to cost competitiveness, receiving an 88.1 percent score. Ottawa (73.1), Vancouver (71.4), Waterloo (69.4) and Montreal (69.3) rounded out the top five, with 20 Canadian cities evaluated.

The 2019 report states that across three cities – Toronto, Vancouver and Montreal – there’s been a 2.8 million sq. ft of new build pre-leasing carried out by tech firms. Also, Toronto and Vancouver have the lowest downtown vacancy rates in all of North America, according to CBRE, and the tech industry has accounted for 17.1 percent of office leasing activity since the beginning of 2018.

Many tech startups turn into profitable tech enterprises, and this can happen fast, so finding a space that also moulds to changing needs can be difficult for those with less cash flow than Google and Shopify, both of which have announced their plans for new office setups in the city, slated to open in 2022.

Tech companies have moved, and are continuing to move, into Toronto. They are shaking up how they do it too, now occupying full floors with varying operations throughout. Take Google’s multi-year deal with IWG Spaces (WeWork’s rival) this past fall, which will see the tech mammoth house 24,000 sq. ft of the Royal Bank Plaza downtown – so two floors dedicated to Google, held in the corporate plaza with neighbours like the Fairmont Hotel, and located directly in the city’s financial district.

Now that they are here, and as Toronto’s talent and output continues to grow all while Toronto’s low housing vacancy rate continues and people struggle to find and keep a livable home – should we be looking to tech firms to solve the housing crisis we have on our hands here? Could they help?

We asked four valuable sources to give us their take on tech and housing in Toronto, and if in fact “tech can help save Toronto” from its housing problem.

Featured are Toronto’s Deputy Mayor, Ana Bailão; Jason Mercer, chief market analyst for the Toronto Real Estate Board (TREB); Matt Daigle, founder and CEO of Rise, a business focused on sustainable home improvement; and Claire Buré, manager at MaRS Solutions Lab.

Below we touch on topics around housing supply, innovation, and emerging building technologies in the housing market. We also ask if there is a responsibility for lucrative tech businesses to invest in housing infrastructure for the communities they serve.

Ana Bailão , Deputy Mayor and City Councillor, Ward 9, Davenport
“Tech companies have been an integral part of our city’s prosperity and continued economic growth,” says Deputy Mayor Ana Bailão . However, Bailão also realizes that “some of the impact of the tech sector on the housing market is, of course, difficult to qualify.”

Bailão notes Sidewalk Labs’ proposal as an example of a technology firm seeking to participate directly in the housing market. “We need to work with tech companies to leverage our processes to ensure that affordable housing is a part of their considerations and a product of their prosperity in our city,” explains Bailão. But these developments also need to be made for and with the community, created for everyone who chooses to live here. And done safely.

Bailão says the public policy debate over whether or not there is a civic duty, or responsibility, of businesses to ensure that the people who choose to work in Toronto can actually live here, existed long before tech was around.

“I do think there is a responsibility to occupy a role” in making ‘livable’ happen, she says, “They are their employees after all.”

Bailão says there is “unquestionably” a role for tech companies moving forward; they should be part of the solution to housing challenges faced in this city. “However, not just tech companies but all larger employers and others” should be chipping in here too.

“It is entirely consistent that large pension funds, public or private, should be investing in the affordable housing market as the beneficiaries of this kind of investment is their clients who are employees of companies within the city,” furthers Bailão.

Still, the Deputy Mayor reiterates that investment within the housing market is the most impactful way tech can play a role in helping solve concerns around housing in Toronto.

As for Sidewalk Labs? Bailão thinks if properly managed it could have a positive role in Toronto, but only if key issues like data management are handled responsibly.

“Our city is taking steps such as our recently approved Housing T.O. 2020-2030 Housing Action Plan, our Housing Now initiative, changes to planning policies, and other steps,” to address housing challenges and future demand in the city. “However, the most effective way to ensure that all of this is successful is by having all sectors and individuals working together,” she adds.

Jason Mercer, Chief Market Analyst, Toronto Real Estate Board
TREB’s Jason Mercer says supply is a big problem in the city, and we haven’t seen any movement – whether talking about ownership housing or rental housing, market-based housing or more affordable housing provided by a level of government agency. There are buyers looking to buy but are now “up against basically a flatline in supply,” he says.

“We live in a region that creates jobs across a number of different sectors, including the tech sector, which continues to be a growing sector in the GTA and the Golden Horseshoe,” says Mercer. “This attracts people from all over the world and they require a place to live – we certainly haven’t seen the level of supply to keep up with demand.”

Mercer also notes that we haven’t been building the “transitionary housing” that people require; moving from a condo apartment to a duplex, then maybe a town house, for example, creating life-cycle housing options.

“I’m not saying it’s a magic bullet and if you provide those types [of transition housing] then everyone is going to be able to find affordable housing but I think given more choice at different price points, it would certainly be a step in the right direction.”

Mercer adds that there’s certainly a place for industry stakeholders, traditional (like TREB) and non-traditional (like tech firms) to work together to solve housing issues, also noting the Sidewalk Labs proposal. But he doesn’t think they should be taxed in order to do so.

“It’s one thing to say, ‘hey, we are going to solve the housing supply problem by taxing this group’ – it’s really easy policy. But with a vibrant and growing population where tech grows too, people will need to live in the city they work in and tech companies can’t help if there is nothing there in supply in the first place.

“If you look at the new listings reported by the TREB over the last decade, they are essentially flat – 150,000 to 160,000 listings – yet sales have been trending upwards. It doesn’t make any sense,” he adds.

Mercer continues to stress the need for supply, and while tech companies are not responsible for creating these, they certainly can start becoming more involved in the oversight process given they are becoming an increasing presence in Toronto’s economic and real estate infrastructure.

“It’s not just housing for the sake of housing, it’s to remain competitive on the global stage,” says Mercer.

Matt Daigle, Founder and CEO of Rise
“I don’t know that tech companies are the ones that are going to solve the biggest problems because they already have their own businesses going,” says Matt Daigle, whose online home improvement portal is for anyone looking to build with sustainability in mind. He’s about “baking sustainability into the DNA of home improvement”.

He notes companies are trying to industrialize the way they build a home, using “CNC [computer numerical control] machinery to build out your wall panels,” or “completely rethinking how we actually build a house” with technology elements in mind.

Daigle says, however, “we’re still building to a similar code that we did 100 years ago,” which he thinks is a big barrier. “I think there are already building standards that you can work with but building with sustainability in mind is the way forward.”

Daigle says governments should incentivize solutions that are better for energy efficiency, and that building technologies (like air recirculation and ventilation systems) are increasingly becoming used and asked about. We should be looking at “building better homes using technology,” which might even cost less than we thought, he says.

Daigle is from Fredericton, New Brunswick, and his company serves the interests of Canadians and Americans, helping people cost appropriate and understand the ‘home’ – from decks to lighting to solar air and water space heaters.

“Technology, hardware or software, is at the core of where the housing industry is going,” says Daigle, who notes 3D printed homes is an emerging area, but that, “tech companies don’t owe anyone more than what other companies should be doing when it comes to housing.”

Daigle says technology can certainly help improve housing conditions and efficiency, and there are innovative models already underway. He highlights German building standard Passive House, whose code is focused on building a well insulated shell of a home so your heating and cooling load remains minimal, with less money spent on energy bills, and “you can leave your house for two months without turning the heat on and your house and pipes don’t freeze,” he says.

Rethinking partnerships around affordable housing is important too. Facebook and Google have already done it in the United States, and granted government and community approval, Toronto could adopt a similar model. Seeing what happens with Sidewalk Labs and its development will also set the groundwork for future visions on housing.

If the codes and ways we build are modified, there’s more room for tech companies and other businesses to help out.

Daigle says more availability and attention should be granted to the prefabricated housing market as well.

Claire Buré, Senior Manager at MaRS Solutions Lab, leading work in affordable housing
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Co-founder of Commons11, a Toronto collective fostering social change through technology, co-design and co-creation.
Transit-oriented affordable housing is Buré’s focus, which she explains is about “innovating within the procurement process for transit infrastructure investment.” So, developing affordable housing as part of the new transit development that is currently being built in Toronto.

“It’s a complex problem with many barriers to innovation, but also many opportunities to do better,” she adds.

Buré says we often treat technology as though it can solve all our problems, however, “we need to remember that we are the ones who create the technology.”

While tech companies could help with the housing crisis, is it safe for them to? And who are they working with (and for) to make this happen? Should they be required to allocate 20 percent to specific housing projects, or community builds to serve more Torontonians looking for somewhere affordable to live?

Buré says either way you look at it tech companies have an enormous power, especially the big five: FAANG (Facebook, Amazon, Apple, Netflix, Google).

“Taxing tech companies and ensuring payment, like the European Commission has done, is one way to generate and redistribute revenue,” says Buré, but we need to be asking: “Who is extracting and who is contributing value to society? And how can we enable greater value for communities, including for housing affordability?”

Buré adds that we need tech companies to ensure diversity and adhere to community values, rather than focus on financial gain.

So, whether or not the tech industry can save Toronto’s housing crisis might also boil down to: do we want it to?

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Canada’s Population Explodes At The Fastest Rate Since 1990, Even With Outbreak

Canada’s national statistics agency is estimating monster growth for population. Statistics Canada (Stat Can) population estimates show fast growth in Q1 2020. The population is now estimated to be growing at the fastest pace in 3 years.

Canada’s Population Estimate Grows At Fastest Rate Since 1990
Canada’s population is growing at the fastest pace in decades, according to estimates. The population hit 37.89 million people as of Q1 2020, up 0.26% from the previous quarter. Compared to the same quarter last year, this is a 1.56% increase. The annual increase is the highest since Q1 1990 – three decades ago.

Canada’s Estimated Population Change

Ontario’s Population Hasn’t Grown This Fast Since 1990 Either
Ontario is also growing at the fastest pace in over a generation, and much faster than the rest of Canada. The province represents 14.71 million people, up 0.36% from the previous quarter. Compared to the same quarter last year, this is a 1.87% increase. We also need to go all the way back to 1990 to see such large growth in Ontario. It’s estimated to be the second fastest rate of growth for any province, right after PEI.

Ontario’s Estimated Population Change

BC Population Is Back To 2017 Levels
British Columbia is growing quickly as well, but we don’t need to go too far to see this record. The province represents 5.11 million in the estimates, up 0.10% from the previous quarter. Compared to the same month last year, this is 1.57% higher. The annual growth is the highest since Q1 2017. Population growth has been a little more consistent in the province.

B.C.’S Estimated Population Change

Quebec’s Population Grows At Fastest Rate Since 1989
Quebec hasn’t seen a population boom this big in over 30 years. The province is at 8.54 million people in the Q1 2020 population estimate, up 0.17% from the previous quarter. Compared to the same quarter last year, this is 1.29% higher. This makes the rate of the growth the highest since Q3 1989.

Quebec’s Estimated Population Change

Canada’s population estimate is forecasting huge growth. There’s a few details to remember during the comparisons though. Prior to 1991, non-permanent residents were not included in Stat Can estimates. This means growth in the 90s was higher, so we likely haven’t hit the same level of growth, if Stat Can used consistent methodology. The rate of growth is still very large, but it’s unclear if the estimate models will hold up with COVID-19 factors.

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More interest rate cuts imminent in Canada’s coronavirus response: RBC

Canada’s central bank has already taken forceful action this month to cut its influential overnight rate to support the country’s economy through the coronavirus pandemic.

It moved on March 4th during one of its regularly scheduled announcements and again on March 13th in an emergency announcement to cut the rate by a cumulative full percentage point. But even with this swift movement earlier in March, the consensus among economists is that another cut is imminent due to the severity of the circumstances.

“The Bank of Canada and governments have been quick to respond to the crisis unveiling a wide range of policies aimed at helping companies and workers stay afloat. However additional measures are needed and we anticipate the Bank of Canada will cut its policy rate further to just 0.25%,” wrote the RBC Economics team in a report titled Canada’s Economy Enters Uncharted Waters.

A cut to this level would mean the rate would reach the same low level as it did during the depths of the 2008-2009 Financial Crisis. The next scheduled Bank of Canada rate announcement is on April 15th, but with the rapidly evolving situation around the coronavirus pandemic, it’s entirely possible the bank will make a move sooner than that.

When the central bank’s overnight rate gets cut or remains at a low level for a prolonged period of time, typically mortgage rates see cuts and stay low for a corresponding period.

The Bank of Canada had kept the overnight rate at the relatively low level of 1.25 percent for well over a year before slashing it in response to the worsening coronavirus pandemic and oil price drops in early March. During the preceding period, Canadian mortgage rates remained at historically low levels and housing market momentum was building following a slowdown caused by stricter government rules around mortgage lending.

But despite a declining interest rate environment, experts aren’t expecting strong activity levels in the housing market due to the prevailing mood of economic uncertainty and the strict social distancing and shutdown measures adopted by governments across Canada.

There is hope that the sustained period of low rates will allow for the market to bounce back quickly once the impact of the coronavirus wanes.

“[Housing] activity is set to slow markedly—likely both sales and listings—although much lower rates should help a second-half revival,” wrote BMO Economist Priscilla Thiagamoorthy.

As Vancouver realtor Steve Saretsky wrote following the first rate cut announcement earlier this month, inexpensive mortgages are only one part of the equation. Consumer confidence and strong employment levels will be key to any housing recovery once the pandemic subsides.

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Housing market still set for a “big year” despite gloom

Lower interest rates will throw more fuel onto the fire that is Canada’s housing market and lead to a strong increase in resale home prices and residential investment this year, despite an economy that looks to be on the brink of a recession.

A report from The Conference Board of Canada warned that the Canadian economy – already on “precarious footing” in the fourth quarter of 2019 – could contract by a projected 2.7% in the second quarter of 2020, as challenges from rail blockades, a collapse in oil prices, and the ongoing COVID-19 pandemic take their toll. However, the report forecasted that the economy would rebound to 2.5% growth in 2021.

“Despite the fact that the global economy is currently shaken at its core, we expect to see growth resume in the third quarter, meaning that the economy will avoid a technical recession,” said Matthew Stewart, director economic forecasting at The Conference Board of Canada. “However, due to the unpredictability of the coronavirus, there are still huge downside risks to the outlook.”

And despite the gloom, The Conference Board said that housing markets are still set for a “big year.”

“While recent interest rate cuts by the Bank of Canada are meant to cushion Canada’s softening economy, they will only add fuel to Canada’s already hot housing market,” the report said. “Interest rates were already low and recent cuts will make it even cheaper to finance a new home purchase. The two other main underpinnings for housing – employment gains and population growth – have also been strong and have driven many resale markets, most notably in Ontario and Quebec, to the point of overheating.”

However, the report warned that the economic fallout from COVID-19 could still create a recession that derails housing demand. It also warned that homebuyers might flinch at the “eyewatering prices” in many cities and lose confidence that the value of their potential new homes will continue to rise in the future.”

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Canada’s largest banks slash prime lending rates

Following the Bank of Canada’s surprise announcement last week that it is lowering interest rates by 50 basis points to 0.75%, the country’s largest banks cut their prime lending rates to 2.95% from 3.45%.

RBC Royal Bank, BMO Bank of Montreal, Toronto-Dominion Bank (TD Bank), Scotiabank, and CIBC slashed their prime rates – which underpins variable-rate mortgages and lines of credit – effective Tuesday, March 17. Meanwhile, National Bank of Canada will reduce its prime rate effective Wednesday, March 18.

The Bank of Canada said that it cut interest rates, the second in two weeks, as a proactive measure “taken in light of the negative shocks to Canada’s economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices.” The move was welcomed by several in the mortgage industry as a strong response to the uncertainty caused by these economic challenges.

“The Bank [of Canada] is acting forcefully to reduce the impact of the coronavirus on the economy,” said James Laird, co-founder of Ratehub.ca and president of CanWise Financial. “It is in these uncertain times that Federal institutions acting quickly and intelligently can reduce the negative impact of unforeseen events.”

However, some experts have warned that the same uncertainty will cause banks to hold back on passing the 50-basis-point rate cut to consumers.

In an email to BNN Bloomberg, Rob McLister, founder of mortgage comparison website RateSpy.com, said a slew of macroeconomic headwinds facing the big banks make him skeptical the lenders will pass along the 50-basis-point prime rate cut to consumers.

“What banks giveth with one hand they will taketh with the other by way of variable-rate discount reductions,” Rob McLister, founder of RateSpy.com, told Bloomberg News. “The weather forecast for banks is hurricane, tornado, and tsunami all in the same month. They’re getting sucker-punched by surging credit spreads, shrinking interest margins, rising loan loss reserves, and increasing default risk (even though mortgage arrears are little changed yet.)”

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Bank of Canada cuts overnight rate again

Beginning today, the Bank of Canada is lowering its target for the overnight rate by 50 basis points to 0.75%. The Bank Rate is correspondingly 1 percent and the deposit rate is 0.50 percent.

The unscheduled rate decision is the second in as many weeks. In a statement, the central bank stated this was “a proactive measure taken in light of the negative shocks to Canada’s economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices.”

Last night, the US Federal Reserve made a surprise announcement in cutting its federal funds rate to a range of 0% to 0.25%. The US central bank also cited the negative economic impact from the coronavirus pandemic for its decision.

Separately, the Bank of Canada has teamed with five central banks to lower the pricing on the standing US dollar liquidity swap arrangements by 25 basis points.

Canada’s central bank announced on Sunday evening that it is working with the US Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank to ensure the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 25 basis points. The central banks aim to increase the swap lines’ effectiveness in providing term liquidity by offering U.S. dollars weekly in each jurisdiction with an 84-day maturity, in addition to the one-week maturity operations currently offered.

These changes will take effect with the next scheduled operations during this week. The new pricing and maturity offerings will remain in place as long as appropriate to support the smooth functioning of U.S. dollar funding markets.

“The swap lines are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad,” said the Bank of Canada in a statement.

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Rent for 1-Bedroom in Toronto Dips Back Below $2300 in February

Torontonians struggling to make ends meet during the COVID-19 pandemic have gotten some respite for their housing concerns: last week, the province suspended evictions, and now, it looks like rental rates in the city are finally starting to drop.

According to the latest monthly rental report from Rentals.ca, the average 1-bedroom apartment in Toronto has dropped from its previous $2300+ threshold first hit in January and is now sitting at $2240, a -3.2% drop from the first month of the year.

In February, the average rent per square foot in certain areas of Toronto was the highest in Yorkville and the Annex at $5.11 per square foot. Year over year, the largest increase in average rent per square foot was 4.6% to $4.07 per square foot in the south core and central Harbourfront.

Despite rates dropping in Toronto last month, on a provincial level, Ontario still had the highest rental rates in February, with landlords seeking $2,212 per month on average for all property types. British Columbia had the second-highest rental rate at $1,885 per month, while Newfoundland and Labrador had the lowest at $927.

What’s more, the rental market softened considerably across the country in February, with the national rental rate dropping 3% month over month and 3.4% year over year, with the average monthly rent hitting $1,823 in Canada last month.

And while rentals.ca says it might be too early to attribute the February decline to COVID-19 worries, after a strong spring and summer for rent growth in 2019, rates have definitely trended downward nationally.

Furthermore, Matt Danison, CEO of rentals.ca, says he believes there’s going to also be a “drop-off” of walk-in showings for apartments across Canada during the Covid-19 pandemic.

“Landlords and property managers will need to embrace virtual leasing as much as possible to keep their staff and potential renters safe during this difficult time. Rentals.ca has committed to help by significantly lowering the cost of 3-D and virtual tours until July 1 to help with social distancing.”

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The Orbit aims to transform Innisfil into Ontario’s most futuristic town

A small town situated 60 kilometres north of Toronto along the shores of Lake Simcoe has aspirations of becoming the city of the future. Characterized by its rolling hills, farmland and cottages, Innisfil is a quiet municipality known to many Torontonians as a place they pass on their way to Muskoka. But with plans to build an ambitious mixed-use community called The Orbit underway, Innisfil hopes to reinvent itself and become a place that future generations will want to call home.

With a new GO Station on the Barrie Rail Corridor proposed for 6th Line, the town saw an opportunity to build something innovative and never-before-seen in the province. Its goal was to strike a balance between urban living to accommodate the anticipated population growth, brought upon by the new train station, while maintaining the area’s natural landscapes and agricultural uses.

“I think the people of Innisfil have been pretty happy to be a small town for its entire inception and the town council wants to maintain all of the things that are awesome about a small town,” said Jason Reynar, Chief Administrative Officer of Innisfil, on the UrbanizeThis podcast. “But we recognize that from a sustainability and fiscal responsibility perspective, we have to densify, and the idea of sprawling, single-family dwelling type subdivisions is not the way that Innisfil wants to grow.”

The town partnered with developer Cortel Group, which owns the majority of the Orbit lands, along with Toronto-based architecture firm Partisans, to develop a 40 million square-feet, transit-oriented, master-planned community.

“We released an RFP and asked to work with a team to create a vision that would leverage the new GO station and embrace the idea of a walkable community where you could live, work and play,” said Reynar. “We want to build a new kind of community centred around transit, where you can access grocery stores, community centres, 3D printer labs, digital media labs et cetera. Partisans was successful in the competition and they’ve worked with us and the land owners for almost a year now.”

Drafted by Partisans, the proposal is designed to accommodate up to 150,000 people with new residential, commercial, institutional and recreational components. Transit initiatives include pedestrian-first streets, new trails and pathways with access to the waterfront, enhanced cycling options and an Innisfil Transit system that incorporates autonomous vehicles and encourages shared trips.

“We know that our cities have been designed around cars, and that’s not conducive to a real community kind of fabric and obviously walkability,” said Reynar. “So we want to be very purposeful about how we design these streets, and our hope is that they’re designed for drop-offs and pickups from both a commercial and a pedestrian perspective.”

Initial renderings of the community show a mix of low- and high-rise buildings of varying shapes and sizes that ‘orbit’ around a central complex. At the core of the community is the Innisfil GO station, which itself boasts a unique, organic aesthetic that could’ve come out of a Zaha Hadid sketchbook. Aerial renderings are even more dramatic as they depict a series of concentric circles that radiate from the GO station. The roadways wrap around the transit hub and gradually expand in size until they hit the outer layers where they morph into a slightly rectilinear shape, which Partisans describes as ‘squircles.’

Another progressive element of The Orbit is the implementation of a dynamic zoning system that allows for greater density and building heights by automatically up-zoning the entire area when one parcel of land reaches 70 percent density.

“The concept is to have dynamic zoning where as the land gets used up, your as-of-right density automatically increases over a period of time for the next parcel,” explained Reynar to UrbanizeThis. “We really want to see land owners and developers who are going to try as best as they can to future proof the developments. So we want them to imagine what the second tower on the same parcel is going to look like now, so they can build in the greenspaces and amenities — that will always be there — for future residents.”

The Orbit isn’t the first example of Innisfil thinking outside the box. The town has undertaken several other progressive urban initiatives in the past, including a deal with Uber to provide local public transit services through publicly-subsidized fares, instead of using buses. In 2019, it teamed up with parking app, Rover, to help alleviate the parking problem at Innisfil Beach Park during the busy summer season. And in the same year, Innisfil was the first municipality in the country to accept cryptocurrency as a method of payment for property taxes. Of course, The Orbit is much larger in scope and more ambitious, but with open-minded municipal leaders and forward-thinking planners at the helm, Innisfil could very well rocket itself to becoming the city of the future.

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Toronto urges landlords to protect their tenants

Landlords should support tenants who become unemployed as a result from the coronavirus outbreak, the City of Toronto said Tuesday.

Mayor John Tory announced the City is taking action to help Toronto’s most vulnerable tenants impacted by the COVID-19 pandemic and, while it has no power to direct landlords, he said that all property owners should find ways to help tenants who need it to stay in their homes during these unprecedented times.

He also urged landlords to communicate with tenants to ensure they are aware of any policies that are in place to help them if they are financially impacted by the COVID-19 outbreak.

For its part, the City of Toronto has pledged help for Toronto Community Housing tenants:

  • For rent-geared-to-income households, which make up about 90 per cent of TCHC tenants, the housing corporation will recalculate their rent based on employment income changes owing to job loss or layoff incurred because of COVID-19. Rent will be adjusted or deferred in order to respond to the economic impact of COVID-19.
  • For market rent tenants whose income has been reduced as a result of a job loss or layoff because of the COVID-19 response, TCHC will consider various case-specific options to assist them, which may include arranging for payment deferment plans that suit their situation over the next few months.

“People across our City are facing challenges we could not have imagined even a month ago. That is why we are taking every step necessary to support them, including having the TCHC work with our tenants to ensure their rents are manageable and their homes secure. Our example will also be our request of all social housing providers and private landlords. Supporting each other we will get through this together,” said deputy mayor Ana Bailão

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8 REASONS THE CORONAVIRUS WON’T CRASH THE HOUSING MARKET

It’s all you hear on the news, it’s all you read in the papers, and it’s all you see on social media. The coronavirus is everywhere, and it’s safe to say that everyone is scared, both of the disease itself and the potential economic implications of the whole country going into a temporary quarantine.

Echos of the 2008 housing market crash have many agents imagining doomsday scenarios and assuming the worst.

But in a recent article published by USA Today, Gus Faucher, chief economist of PNC Financial Services Group, said, “A recession is not inevitable. If we do get a recession, it is likely to be brief and much less severe than the Great Recession.”

Faucher notes that the 2008 financial crisis and recession resulted from years of deeply rooted economic insecurities, which isn’t the case now.

“What we’re seeing is caused by something external to the economy,” Faucher said.

There are key differences in this market that spell good things for the housing market despite recent events. Let’s examine some of the key indicators that we will avoid a housing market crash.

1. Inventory is low.
A December 2019 Forbes article predicted a historically low level of housing inventory in 2020. According to NAR statistics, there is a chronic shortfall of 300,000 to 400,000 housing units every year.

Bryan Souza, a real estate agent from Fresno, Calif., who worked through the 2008 recession, says there is a key difference between that market and today’s.

“Back then, we had 18 months of supply…it was a buyer’s market,” Souza said. Today, in our local metro and actually nationwide, we’re looking at two to three months of inventory. And so, it’s more of a seller’s market.”

Even when markets turn, buyer demand remains. Even if some buyers initially delay their purchases out of fear, when that fear subsides, most buyers will still want to buy — and that pent-up demand will turn into sales.

2. Mortgage rates are low.
Mortgage rates have been below 4% for some time and are expected to remain low. These low rates will encourage more people to buy, even if they are dissuaded by initial fears caused by the virus.

3. Subprime loans are down.
The 2008 crash was set off when banks and other lenders approved an overabundance of mortgages to unqualified buyers, driving up home prices to too-high levels. When home prices began spiraling down, millions of Americans stopped making mortgage payments and lost their homes, and banks were pushed to the edge of bankruptcy.

At that time, household debt climbed to a record 134% of gross domestic product. Today, household debt is at a historically low 96% of GDP. Households today are saving about 8% of their income, compared to just 3% in 2008.

According to data from the Federal Reserve Bank of New York and Equifax Consumer Credit Panel, from the third quarter of 2001 through the end of 2008, an average of 20% of all mortgages originated went to people with subprime credit scores (lower than 660). In the third quarter of 2018, subprime borrowers received just 9% of all mortgages.

All of this means more Americans are better equipped to handle a temporary economic disruption that won’t significantly impact their ability to buy homes or hold onto their current ones.

4. Today’s homeowners have more equity in their homes.
According to a Federal Reserve report called the Flow of Funds, Americans owned $18.7 trillion of their homes, giving them a 64% equity stake. By comparison, this number was just 52.7% in the first quarter of 2007. This means that the vast majority of homeowners will have no problem keeping their homes during these uncertain times.

5. The government is offering a moratorium on foreclosures for 60 days — which is likely to be extended for up to 12 months.
In light of the current situation, the Department of Housing and Urban Development announced that all single-family homeowners with Federal Housing Administration-backed mortgages would be shielded from foreclosure or eviction until mid-May.

The Federal Housing Finance Agency has suspend all foreclosures for “at least 60 days.” The FHFA also offered payment forbearance to homeowners affected by COVID-19, allowing them to suspend mortgage payments for up to 12 months.

These moves should instill confidence in home sellers and give them an opportunity to sell their homes during the extension.

6. Home prices appreciated during previous recessions.
Not every recession signals a housing market crash. In fact, home prices went up in three out of the last five recessions (1980, 1981, 2001) and remained mostly flat in one (they dropped 1.9% in the 1991 recession). They only dropped significantly in 2008.

According to Zillow, annual home value appreciation across all states since 1997 has averaged 4.6% during times of economic growth and 4% during recessions.

The current market conditions are much more similar to how they were in 2001, after 9/11.

7. People will always need a place to live.
More than ever, people understand the value of having a roof over their heads. In times of uncertainty, homeownership is a security people take pride in and work toward. Real estate is above all a human industry, and humans crave the stability of homeownership.

8. No one knows how long this will last.
Fear is at an all-time high right now. There is so much uncertainty about how this virus will impact people in the United States that people are assuming the worst.

If a viable cure is found in the next few weeks and rolled out, this pandemic could be a much shorter-term issue than initially anticipated. Now is not the time to start panicking and stop doing what works and makes sense.

If you have a solid marketing strategy, like a marketing system you follow or marketing materials, like books, that are consistently helping you get listings, now isn’t the time to abandon tried and true resources.

Stick to what’s working, adapt with the change, and you will come out on top.

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33 Avenue Road Condo Tower Proposal Changes in New Design

A proposal to redevelop the northeast corner of Avenue Road and Yorkville Avenue first appeared on UrbanToronto’s front page in 2012, and after another change to the project’s team, a new version of the proposal has appeared in a new rezoning application. Before we dive into what’s being proposed by developers First Capital and Greybrook Realty Partners, let’s take a look back at the various designs and teams that preceded the current plan.

2012’s proposal from Empire Communities called for a 38-storey condominium tower, designed by Zeidler Partnership Architects with Richmond Architects. This plan would subsequently be resubmitted to the City at 35 storeys with an almost identical design, before eventually reappearing in 2014 with new plans.

The 2014 plan saw First Capital partner with Empire Communities, expanding the site area in hopes of securing zoning for a 40-storey condominium tower. Once again designed by the team of Zeidler and Richmond, the project incorporated a sweeping curve in its massing and a playful incorporation of the existing York Square, a group of seven Victorian homes which were been integrated into Yorkville’s first commercial redevelopment way back in 1968 by renowned architects Jack Diamond and Barton Myers.

The team of Empire and Greybrook Realty Partners returned with a new 30-storey plan for the site in early 2016, submitting a proposed “vertical forest” with terraces lined in greenery and a more respectful integration of York Square, still by the design team of Zeidler and Richmond.

With the same team on board, this “vertical forest” plan was refined in May, 2016, reduced to 29 storeys, and featuring facades of copper-hued panels to complement the greenery.

Now, in 2020, the project has been resubmitted with a new team led by developers First Capital and Greybrook, and now being designed by Giannone Petricone Associates and BBB Architects. This new design would rise 29 storeys to a height of 125.1 metres—a slight increase from the previous plan—with a total gross floor area of 29,332 m². The existing York Square Victorians on site are absent from the latest plan. The majority of this GFA is planned as residential space, at 24,879 m², or 84% of the total GFA. The remaining 4,454 m² is proposed as retail space housed within the first three floors of the building.

The retail component would include a prominent corner space, referred to in planning documents as the ‘jewel box.’ Set to act as a gateway to the complex, this retail unit would be separated from a new community space by a pedestrian mews that connects to York Square, where a privately-owned public space will be positioned in the middle of the site’s frontage along Yorkville Avenue. East of York Square, retail spaces would line a second pedestrian mews leading to a new entrance of the Yorkville Village Mall.

A limited selection of just 100 condominium units—increased from 74 in the previous proposal—would be spread across the tower. In an unusual unit breakdown, no studio or single-bedroom units are planned, with the building planning larger suites only; 88 two-bedroom units and 12 three-bedroom units.

A four-level underground garage would contain a total of 220 vehicular parking spaces, divided between 210 long-term resident spaces and 10 short-term visitor spaces. 126 bicycle spaces are also planned for residents with local commutes, with the majority to be provided on the P1 underground level.

 

 

 

 

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Canada’s home market expected to overcome slowing market

A WEEK into a pandemic that has forced a swath of Canada’s economy to shut down and wiped hundreds of billions of dollars off the nation’s stock market, a Vancouver mansion sold for C$150,000 (S$150,000) over the asking price.

As the coronavirus upends the real estate business, along with everything else, the country’s indefatigable buyers are taking some pause – but, so far, not much.

John Pasalis’ firm was getting ready to list a C$1.1 million home in Toronto’s trendy Leslieville district next week but was preempted by two “bully” offers – those made ahead of the official selling date. A deal was struck before the property ever hit the market.

“Some of those buyers are seeing the slowdown as a way to compete without too many people,” said Mr Pasalis, the president of Realosophy Realty.

Before the virus landed in Canada, its three biggest housing markets – Toronto, Montreal and Vancouver – were gearing up for a sizzling house-hunting season this spring. That outlook has now dimmed.

Home resales are expected to fall in the coming weeks as the economy contracts. Agencies are cancelling open houses, and a traditionally face-to-face industry is using virtual tours to get some deals done.

An extended drop in Canada’s housing market would be a major blow to an economy already reeling from the meltdown in oil prices.

Prime Minister Justin Trudeau, the Bank of Canada and the country’s biggest commercial banks are pulling out all the stops to try and head off a serious recession.

The central bank has now cut interest rates a full percentage point to 0.75 per cent in the past two weeks, spurring mortgage rates lower, and it may cut again. The banking regulator is loosening bank capital requirements to free up C$300 billion of lending capacity.

Meanwhile, Canada’s six biggest lenders, including Royal Bank of Canada, Bank of Montreal and Toronto-Dominion Bank, said they would consider six-month mortgage-payment deferrals for small businesses and individual borrowers impacted by the pandemic.

In the longer run, relentless demand means any pullback will likely be short-lived and prices should hold up, said Robert Hogue, senior economist at RBC.

“In all likelihood, this will be a temporary hit with a rebound taking place later this year once the Covid-19 situation settles down – though the timing and magnitude of the rebound are highly uncertain at this point,” Mr Hogue said in a research note this week.

Re/Max, one of the nation’s biggest brokerages, on Tuesday urged its 18,000 brokers across the country to cancel all open houses.

In Vancouver, developers are closing sales centres and construction sites will be impacted as building activity is interrupted, according to Anne McMullin, president of the Urban Development Institute, an industry group.

But underpinning the market is the fastest pace population growth in 30 years, driven in large part by immigration, and the appeal of Canadian real estate to those with cash to deploy at uncertain times, including foreign buyers. In Montreal, a New-York based buyer just made an offer on a property listed at more than C$2 million after a virtual visit, said Debby Doktorczyk, owner of Engel & Volkers Montreal, which counts 175 brokers.

Momentum helps. The housing market entered the spring selling season on a high, with sales across the country up 25 per cent from February 2019. Toronto and Vancouver home resales surged about 44 per cent from the same month a year ago, while Montreal’s were up about 23 per cent.

The market was extremely strong – if not a bit “crazy” – before the pandemic, says Ms Doktorczyck.

Now, “instead of getting 15 offers for a property, we’re getting five”, she said, adding virtual visits are likely to become more common.

Even in Vancouver, which was only just emerging from its worst year in decades before the coronavirus, Royal LePage broker Adil Dinani says his shop is still doing 90 per cent of the deals expected.

Mr Dinani was up past midnight negotiating the sale of a C$2.3 million, six-bedroom home in an affluent suburb just outside Vancouver. The open house on Sunday had drawn 40 groups – some 85 eager buyers undeterred by the virus – who waited to enter one group at a time. The property drew seven offers, including the winner – an all-cash bid, almost C$150,000 above asking.

While open houses may be suspended, home buyers can still see homes by appointment, say agents. Meanwhile falling mortgage rates will act as a spur.

Borrowers can now get a five-year variable mortgage at 2.1 per cent and a three-year fixed at 1.99 per cent, according to RateSpy

“You know the saying – oxygen for any real estate market is low interest rates,” said Mr Dinani. “Interest rates just got lower. There’s a lot more room to move in Canada. That prime rate can come down more, unlike the US and other nations that are pretty much operating near zero.” BLOOMBERG

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Toronto Residents Granted 60-Day Grace Period to Pay Utility Bills

To alleviate some of the hardships Torontonians are facing due to the spread of COVID-19, Mayor John Tory has announced a 60-day grace period for several City utility bills.

Mayor Tory announced the 60-day grace period Friday morning, which will cover City of Toronto property tax, water and solid waste utility bill payments for all residents and businesses, for bills dated as of March 16.

The COVID-19 pandemic has turned people’s lives upside down overnight. We know families are struggling to figure out how to make ends meet while also worrying about their health and the health of their loved ones,” Tory said in a statement.

“Toronto businesses and residents need to know that we understand these are extraordinary circumstances and we are here to support them.”

The City said late payment penalties for residents and businesses on tax and utility bill payments will be waived for 60 days, starting March 16 to give residents some “relief” as the City works to rebuild the economy, said, Tory.

“We will continue to find ways to offer extraordinary help in these extraordinary circumstances.”

 

Earlier this week, the city announced a 30-day grace period for businesses amidst the ongoing measures posed by local and provincial health officials, which include the closure of non-essential business and for residents to work from home and practice social distancing to help prevent the spread of the virus. This 30-day grace period will now be extended to 60 days.

Mayor Tory also announced that he will continue to advocate for renters in the wake of the pandemic and said that he’s been continuously calling on landlords to provide accommodation and leniency for renters at this time.

“Just as I know many households and businesses are reviewing their finances in the wake of COVID-19, we are continuing to review the City’s finances to fully understand its impact on our operations and revenues,” budget chief Gary Crawford said.

“While we know there will be a financial impact to the City, we are moving now and in the coming weeks to do what we can to help our residents.”

This comes as both the federal and provincial governments have announced financial compensation plans for those who have lost wages during this time.

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Is Toronto real estate the new gold? Home sales soar as global financial markets tank

Every financial market you can think of is in an uproar right now, but not Toronto real estate.

Sales of houses and condos for the first week of March were up 47 per cent over the same period last year and average prices rose 18 per cent, said John Pasalis, president of Realosophy Realty, a real estate brokerage that specializes in data analysis.

“Sales are still strong, there are still lots of bidding wars, open houses are still packed,” Mr. Pasalis said. “There’s no slowing down right now, from what we’re seeing at least.”

Stocks have fallen hard since the last week of February in Canada and globally because of fears that the coronavirus will hurt corporate profits, and interest rates are plunging because of fears that the economy will fall into recession. Gold used to be the financial asset people turned to provide a storehouse of value in uncertain times, but gold prices have been up and down since the stock and bond markets turned volatile.

Might home buyers be thinking along the lines that Toronto housing is the new gold? “Kind of – it feels like that,” Mr. Pasalis said. “There’s a mood now where people want to buy investment properties. It’s like this real need to stock up on as much real estate as possible.”

Toronto real estate could well be a lagging indicator, which means that the effects of what’s happening in global financial markets won’t be noticeable until weeks from now. But Mr. Pasalis said there’s a sense among buyers, fed by commentary from economists and the housing industry, that the only thing to worry about in the Toronto market is a lack of properties on sale.

“The problem with this is that it makes people think prices can only go up,” he said. “Of course, that’s not the case.”

Mr. Pasalis sees vulnerability in the fact that condo prices are soaring as a result of buying by investors who plan to rent their units, but growth in monthly rents has faded. This could make it harder to generate the monthly income needed to carry the mortgage on an investment property.

The market for single-family homes has its own problems. “It’s not healthy,” Mr. Pasalis said. “It’s so competitive and we’re seeing a lot of irrational prices being paid. People are offering prices that make zero sense.”

Concern about the economy falling into recession has led to a sharp decline in interest rates for all kinds of borrowing – government bonds as well consumer loans, lines of credit and mortgages. But home buyers and people in the real estate business don’t see these rate cuts as a warning sign about a lack of security for jobs and incomes, Mr. Pasalis said. “These cuts actually get people excited about the market.”

The last time stocks plunged on a sustained global basis was 2008-09, which turned out to be a great time to get into the housing market. Owing to rapidly falling interest rates, houses became much more affordable. Prices then soared in many cities – enough so that early buyers have seen the value of their home double or triple over the years.

If the coronavirus burns out soon and the global economy rebounds, Toronto house and condo prices could rise enough to justify the aggressive buying going on right now. But if there is an economic slowdown or recession, housing could very well be hammered even if rates fall to zero.

In 2008-09, there was a deep well of consumer borrowing power for the housing market to draw from. Since then, people have borrowed nearly to the point of saturation. The credit monitoring firm TransUnion Canada says average non-mortgage debt balances fell 0.5 per cent on a year-over-year basis in the final three months of 2019. Mortgage debt soared 17 per cent, but can this be sustained in a weakening economy?

Mr. Pasalis says he believes the big risk to the Toronto market is neither what’s happening in financial markets nor the coronavirus, unless it gets bad enough to cause a lockdown in the city. To him, the bigger problems are in the market itself.

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