Will COVID-19 affect the spring real estate market?

Unlike the stock market, COVID-19 hasn’t affected the Lower Mainland real estate market — at least, not in a negative way.

A friend of mine just closed on an apartment for $500,000 where she had to deal with a bidding war and ended up paying over asking. Open houses are still well-attended and quality properties are being snapped up quickly. Even detached homes at higher price points are starting to move.

Low supply and high demand have pushed up prices — particularly in the case of condos which are selling at all-time highs.

To cushion the economic blow caused by COVID-19, central banks around the world have cut interest rates. Anyone with an existing variable mortgage, or someone looking to get one, can expect their borrowing costs to decrease. The Bank of Canada cut rates by a full percentage point since the beginning of March.

We are also seeing investors flee the stock market and park their money in investment grade bonds. A result of this flight to safety is that fixed-term mortgage rates are dropping. Lower mortgage rates increase the amount a home buyer can borrow, which pushes up prices as borrowers are able to make higher offers.

We also cannot forget about the mortgage stress test. On Feb. 18, the federal government announced that the hurdle rate of the stress test would be lowered effective April 6. In anticipation of this change, many buyers re-entered the housing market, increasing demand on a real estate market with limited inventory. However, as of last Friday, the Department of Finance announced that changes to the stress test have been put on hold.

Buyers beware
All these factors are fuelling the housing market and not even COVID-19 appears to be able to slow it down — yet.

It was just a month ago when stock markets were at an all-time high, largely due to the fear of missing out, whereas today it’s the opposite: many people are panic selling.

The same could happen, but to a lesser degree, with real estate, as buying psychology is fickle.

It’s important to also keep in mind that, since all financial markets are interconnected, a stock market drop should affect the housing market. For example, many new buyers turn to the bank of mom and dad to help with their down payment. However, after experiencing a drop in their investment portfolio many parents will be less inclined, or no longer able, to help their children fund a down payment.

Another important factor to consider is the potential loss of income that COVID-19 may cause. Some lenders might be hesitant to lend to applicants working in areas affected by the pandemic such as the travel or oil and gas industries.

Selling? List properties right away
All these variables can affect demand.

If I were a buyer, I would be cautious. Don’t underestimate COVID-19’s negative impacts on the economy, jobs and buyers’ sentiment and avoid overstretching your budget — something that tends to happen when buying in a seller’s market.

My advice to sellers who are looking to cash out or downsize is to list their properties right away. Momentum is on your side and there is limited inventory, so sellers of quality homes are getting top dollar. The demand is currently high, but I wouldn’t be complacent and assume that it will last. If offered a reasonable price, I would take it.

If you don’t need to sell, I wouldn’t and I’m not. I still think housing in B.C. is a great long-term investment.

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CORONAVIRUS (Covid-19) and THE TORONTO REAL ESTATE MARKET

What is the real story of Covid-19?

If you are a “News Junkie”, like me, and have been following the story of the virus Covid-19, including, cancellations of school, work, events and travel options. It is very hard to get pragmatic advice but today, I received an email with an interview with Dr Peter Nord, Chief Medical Officer of Medcan, a health and well-being organization. Have a listen to the most recent podcast which really gives a cogent opinion on what is transpiring globally without the dramatic presentations that you may be viewed in the Media. There is a lot of confusion so do yourselves a favour and take the time to listen to this interview about Covid-19. It is well worth the time to get a common-sense take on Covid-19, the future and best ways to protect yourselves.

How will Covid-19 Affect the Real Estate Market in Toronto?
Remember that Toronto was a very strong recipient of SARS in 2003 and it was similar in effect. What we could expect from a repeat performance on is unknown but if we go back to those earlier days, the market did slow as buyers hunkered down. However, today’s market has shown to have numerous buyers for each property that becomes available. The numbers of offers may reduce but that may be an excellent opportunity for those buyers that persist in searching for their dream home.

Sellers may have to be somewhat more flexible and be open to seriously considering good offers if their intention is to sell. It’s always best to sell and buy in a similar market and the reaction from the Bank of Canada has been to lower the prime rate which may also act as a stimulus to this market.

My suggestion would be to keep looking at homes, use your computer and apps like Real Estate Dot Love, which you could download by clicking here. You may want to avoid Open Houses or be vigilant about handwashing and physical expressions like hugging or handshaking just as you would in a strong flu season.

 

Technology has advanced greatly and you can sign and submit offers without anyone coming face-to-face if you are high risk and/or greatly concerned about the Virus.

If the timing is right for you and your Home Dreams then move ahead and take advantage of the marketplace. Toronto has never been a quiet easy market. So much affects our real estate microcosm, that it has proven to be constantly in flux. There are only good and bad times in hindsight.

“No one ever overpaid for the right home”.
Those who years ago predicted the “Toronto Real Estate Bubble” and the crash of it have only found themselves priced out-of-the-market in Toronto. They now are moving farther away and commuting more in a region where traffic and roads are not keeping up with the population shift. They find themselves “driving till their mortgages are approved”.

Don’t let yourself be forced out of the market, even if it means an expectation adjustment. Can three bedrooms and a den allow more options than 4 bedrooms?

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How the coronavirus might impact Canada’s housing market

Businesses all over the world are becoming increasingly concerned about the coronavirus’s impact on various markets as the death count and number of affected individuals mounts.

Could the coronavirus adversely impact property markets in China and beyond? The answer mostly depends on how quickly the virus is prevented from spreading within China and elsewhere. In the meantime, the uncertainty about the potential for contagion is keeping chief risk officers awake at night.

The current outbreak is caused by a new strain in the family of viruses characterized as coronavirus, but a similar epidemic in 2003 caused by Severe Acute Respiratory Syndrome (SARS) impacted Hong Kong and many other countries, including Canada.

Toronto was one of the first places in Canada to experience SARS-related emergencies. Health officials implemented strict protocols to prevent the virus from spreading. Even handshakes were discouraged. During the 2003 convocation ceremonies at the University of Toronto, the traditional handshake with the school’s president was replaced with a gentle head bow.

Earlier precautionary measures to contain the virus discouraged discretionary travel and face-to-face interactions. Generally, a slowdown in market activity is likely when consumers avoid grocery stores, hair salons and/or restaurants, but is it significant enough to cause a decline in economic output, including property markets?

Despite the challenges resulting from SARS, the Canadian economy did not necessarily experience a slowdown in 2003. Canadian GDP grew to $892 billion in 2003 from $758 billion in 2002, and it ultimately crossed the trillion-dollar threshold in 2004.

Hong Kong, the epicentre of the 2003 SARS epidemic, experienced a slight slowdown, with GDP declining to US$161 billion in 2003 from US$166 billion a year earlier. The Hong Kong economy, though, had not been growing since 1997 when GDP reached US$177 billion. Hence, the slowdown in 2003, even if meaningful, could not be entirely attributed to SARS.

Even neighbouring China’s economy grew, to US$1.6 trillion in 2003 from US$1.3 trillion in 2002. Chinese economic growth, however, took off in 2006, with record year-over-year GDP growth that has lasted for more than a decade.

As for property markets, recall that Toronto bore the brunt of SARS in Canada. If anyone was expecting a slowdown in housing sales or moderation in housing prices, they might look at a city where handshakes were almost forbidden.

Interestingly, housing sales data from 2003 in Toronto show no apparent signs of suffering. Sales increased to 78,898 units in 2003 from 74,759 units in 2002. Similarly, the average sale price increased by around $18,000 during the same time period. Essentially, the growth in sales and prices in 2003 was in-line with long-term trends.

The numbers above raise two related questions: Did SARS, despite the enormous death toll and the cost of the resources mobilized to contain the threat, have a limited economic impact elsewhere as well? And can one draw any inferences from SARS for what property markets may experience from coronavirus?

The housing market dynamics in 2003 in Hong Kong offer some context. The SARS epidemic claimed the lives of 300 Hong Kong residents, representing a third of all SARS-related deaths worldwide. Grace Wong Bucchianeri, a former professor at Wharton, reported in the Journal of Urban Economics in 2008 that housing prices in Hong Kong fell by eight per cent, equivalent to a total value of US$28 billion.

This raises the question of whether the decline in Hong Kong housing prices in 2003 resulted entirely from SARS or was it an acceleration of the lingering “pre-SARS downward trend.” Controlling for the “already frail Hong Kong housing market,” Bucchianeri observed a moderate average price decline of 2.6 per cent that could be attributed to SARS.

Coronavirus to date has already claimed more lives than SARS did in 2003. The uncertainty about how long the threat will last and how quickly it can be contained will weigh heavily on the markets. Since the epicentre of the breakout is far from Canada, it is probable that the adverse impacts on Canadian markets will be moderate at worst.

Evidence from Toronto in 2003 suggests that the housing markets in Canada did not experience a noticeable adverse impact from SARS. The effect of coronavirus, if any, is likely to be moderate in the short run. If the challenge persists over a more extended period, Canadian housing markets are likely to become even more attractive to investors who would like to move their capital from markets with ominous health risks to the relatively safe environs in Canada.

Financial Post

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Virus-driven rate cut could add kerosene to housing market

Canada’s housing market is poised for a hot spring — with lower mortgage rates likely to offset any major drag from the coronavirus.

While a reduced travel from China may crimp sales in Vancouver, and the potential for a recession could set the market back, the possibility of interest rate cuts from the Bank of Canada is likely to fuel further declines in mortgage rates and draw buyers into the market.

“People are not concerned about coronavirus, people are not concerned about recession,” John Pasalis, president of Toronto property brokerage Realosophy Realty, said Monday by phone. “The only things they’re worried about is buying a home — and if they don’t buy now they might spend more in the future.”

A confluence of factors is priming the pump for a brisk buying season. Lower bond yields amid the virus have allowed Canadian banks to unveil mortgage specials and the government has tweaked its mortgage qualification rules. Meanwhile, markets have begun to price in an interest rate cut from the Bank of Canada to cushion the economic of virus as soon as Wednesday — maybe even 50 basis points.

“All of this is great news for housing and the mortgage market — until and unless we see a huge spike in coronavirus cases in Canada and/or a big jump in unemployment,” Robert McLister, founder of mortgage comparison RateSpy, said in an interview. “Lower rates are stimulative to housing.”

Home prices in some of Canada’s largest cities have already been rebounding after the market slumped through 2018 and 2019. Shrinking supply in Toronto drove prices to their strongest gains in more than two years in January. Pasalis estimates that sales were more than 40 per cent higher in February from a year ago.

Yield Freefall

“We’re back to near all-time highs in some markets, and we’re seeing prices ramp up and bidding wars in hot markets,” McLister said. “Everyone knows exactly what happens in the near term if mortgage rates plunge — that’s just more kerosene on the fire.”

Royal Bank of Canada cut some mortgage rates at the end of January and HSBC Holdings Plc’s Canadian division began offering a three-year fixed-rate mortgage special of 1.99 per cent on Monday while lowering its five-year fixed rate for uninsured mortgages by 30 basis points to 2.49 per cent.

“This freefall in yields has been stunning — you don’t see this often — and it’s now just starting to translate into meaningful discounting in mortgage rates,” McLister said.

Jonathan Bundle, head of mortgages and secured lending at HSBC Bank Canada, anticipates more competition on mortgages ahead.

“There’s indication that it’ll be a strong property market this year and because of that you are going to see that a lot of lenders will end up being competitive,” he said.

Vancouver Affected

Still, some realtors have reported some early impacts on activity in cities like Vancouver as the coronavirus outbreak in China cut travel demand in the first two months of the year.

“Since they’re not coming here for vacation for Chinese New Year, it’s pretty hard for them to make a decision on any property,” Vancouver realtor Jerry Huang said in an interview. “People were planning to do open houses early February and obviously the turnout wasn’t as good because there’s just a lot less traffic.”

He estimated a drop of “50 per cent plus” of overseas buyers, especially from Asia, who were going to visit Vancouver for real-estate projects and deals that just didn’t come.

Kevin Wang, real estate adviser and property manager at W Brothers Real Estate Group in Vancouver, said longer term, buyers from China may have more of an incentive to buy in Canada to avoid future virus outbreaks.

Neither Ratespy’s McLister nor Realosophy’s Pasalis see the coronavirus as playing a big role in the coming months for housing demand, noting that Toronto’s SARS outbreak 17 years ago failed to dampen sales.

“The market is so far out of balance that you could lose half the sales and it’d still be really, really busy,” Pasalis said.

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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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Home Sales in Canada up 26.9% Year-Over-Year in February: Report

Despite a rocky couple of weeks, Canada’s real estate market continues to experience notable growth, with home sales up in February compared to the same time the year prior, according to a new report from the Canadian Real Estate Association (CREA).

According to the report, which was released Monday, home sales recorded over the Canadian MLS Systems rose by 5.9% last month, marking one of the larger m-o-m gains of the past decade.

The association also reported that sales for February, which included an extra day due to the leap year, were up 26.9% compared with the same month last year.

CREA reported that transactions last month were up in about 60% of all local markets, largely as a result of a 15% jump in activity in the Greater Toronto Area (GTA).

“Following a quieter than normal December/January period, February saw a burst of new listings in some of Canada’s most supply-starved markets, so it was not a surprise that sales were up alongside that increase in new supply,” said Shaun Cathcart, CREA’s Senior Economist.

“There is some question about how much pent-up demand remains in parts of the country where listings have been low for some time now. That said, it will take more than one month of increased new listings to even start to turn some of these markets towards some semblance of balance. In the meantime, expect competition among buyers for available listings to continue to drive prices higher.”

According to the report, the number of newly listed homes in the country rose 7.3% in February compared with January.

Additionally, the increase in the number of sales came as the national average price for homes sold last month rose 15.2% compared with a year ago to $540,000.

The association said the increase in the national average price was heavily influenced by sales in the Greater Vancouver Area and in the Greater Toronto Area, two of Canada’s most active and expensive housing markets.

Excluding those two markets from calculations cuts close to $130,000 from the national average price, trimming it to around $410,000.

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COVID-19: Government announces new mortgage buying program

The Canadian government has announced a further measure to mitigate the impact of the COVID-19 crisis and to help maintain stability in the financial system.

It will launch a revised Insured Mortgage Purchase Program (IMPP) which will see up to $50 billion of insured mortgage pools purchased through the Canada Mortgage and Housing Corporation (CMHC).

It means that banks and mortgage lenders will have stable funding to continue to lend to consumers and businesses.

The government highlights that this does not pose additional risk to taxpayers as the insured mortgages being purchased are already backed by the government.

“These events remind us all how crucial it is to have a safe and affordable place to live. CMHC exists in part to buffer the effects of events such as the COVID-19 virus pandemic, which affect the health and stability of Canada’s financial system. This is what we do. We are part of a federal team that is working hard together to ease the impacts on Canadians,” said Evan Siddall, president and CEO of CMHC.

Earlier this week, the Office of the Superintendent of Financial Institutions (OSFI) announced measures to shore up finances of the institutions it regulates and the suspension of the planned changes to the mortgage stress test.’

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Property Taxes in Toronto are Increasing 4.24% this Year

Toronto city council has voted in favour to increase residential property taxes 4.24% this year.

Council voted 21-3 in favour of the tax hike Wednesday morning, as part of the city’s $13.53-billion operating budget.

Under the 2020 budget, property taxes are set to increase with the rate of inflation, and when combined with the increase to the City Building Fund, which addresses transit and housing, 2020 property taxes for residents will go up 4.24% to $3,141.

 

 

According to the budget, for the average residential home assessed at $703,232, residents will now be paying an additional $128 on their $3,141 property taxes in 2020. This amount includes a $61 increase for city operations, a $22 increase for reassessment and rebalancing, and a $45 increase for the City Building Fund.

What’s interesting to note is that of the $3,141 taxes, just $62 goes toward children’s services, which explains why childcare is often so hard to come by and the most expensive in the country.

Included in the 2020 operating budget are $67 million in new expenditures, which are said to go toward addressing key city commitments, including poverty reduction ($15.3 million) and addressing climate change ($5.9 million).

Another big focus in the Budget is partnerships, with staff expecting the federal government to continue to support the city’s refugee program, $77 million is already factored into the Budget.

Other partnerships include the provincial upload of subway expansion, which allows the city to redirect funding to transit state-of-good-repair, and the federal government’s co-investment of $1.3 billion for building repair for Toronto Community Housing Corporation.

 

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Home buyers in the GTA will largely focus on detached housing

A significant proportion of those planning to buy homes in the Greater Toronto Area this year are going for detached housing, according to a new report by the Toronto Residential Real Estate Board.

The share of those seeking this type of property stood at 42% as of fall 2019. This was markedly lower than the 54% reading in fall 2015, mainly due to the impact of the OSFI-mandated mortgage stress testing.

“In order to adjust to the more stringent qualification standards, intending buyers followed a number of different paths. The most common responses involved changing home price, type or location,” TRREB said. “Some intending buyers also looked to alternate lenders, such as credit unions or the secondary lending market.”

Overall, however, sustained demand will continue driving activity in the detached segment this year. The trend is expected to further amplify the market’s already severe inventory issues, which were already quite apparent in 2019.

“After more than three years of slower market activity brought on largely by changes in housing-related policies at the provincial and federal levels, home sales will move closer to demographic potential in 2020. The key issue, however, will be the persistent shortage of listings. Without relief on the housing supply front, the pace of price growth will continue to ramp up,” TRREB Chief Market Analyst and Director of Service Channels Jason Mercer explained.

“Policy makers need to understand that demand side initiatives on their own will only have a temporary impact on the market.”

The TRREB predicted that the region’s home sales numbers will likely reach 97,000 this year, which will be 10.5% larger on an annual basis. Price growth will also see similar gains, with a near-10% increase to reach an overall average sales price of around $900,000.

“This forecast rate of growth presupposes that price growth will continue to be driven by the less expensive mid-density low-rise home types and condominium apartments,” TRREB stated. “If the pace of detached home price growth starts to catch up to that of other major home types, the average selling price for all home types combined could push well past the $900,000 mark over the next year.”

 

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Toronto Named 6th Happiest City in the World: Report

Despite real estate prices that are forcing millennials to look elsewhere in Ontario, and a public transportation system that leaves too many stranded too often, it turns out Toronto residents are pretty happy despite these circumstances. In fact, Torontonians have it pretty good compared to other urban centres, which is why the City was just ranked one of the happiest in the world in a new report.

Knight Frank, a global real estate consultancy, just released its inaugural “City Wellbeing Index,” which “gauges the quality of life in the world’s most-liveable cities.”

The survey analyzed 40 global cities and used eight measures to “identify those urban centres that are enabling citizens to achieve a higher level of wellbeing.”

While Knight Frank said the measures are subjective, the criteria used to rank the cities included measurements like a city’s overall greenspace, annual hours of sunshine, crime, traffic congestion, happiness, quality of healthcare, work-life balance, and governance.

The wellbeing survey’s results show that European cities dominate, with Norway’s capital, Oslo, taking the top spot, followed by Zurich and Helsinki tied in second place, and Vienna in fourth.

Madrid rounds out the top five, with Stockholm in sixth place. The highest-ranking for Australasia is Sydney in seventh. For North America, Montreal is highest in ninth place, for Asia it is Singapore in the tenth and in the Middle East Dubai takes the fifteenth spot.

As for our fair city, Toronto made it into the top 25 highly-liveable cities and placed 13th for overall wellbeing in 2020, followed by Seoul, Dubai, and Lisbon, respectively.

But what’s important to note is that Toronto tied with Montreal for being the 6th happiest city in the world, receiving a score of 9.2 out of 10.

“There is a growing focus on wellness as a measure of national performance: something that has in the past been assessed in purely economic terms, generally measured in the form of GDP,” reads the report.

“However, there is no universally accepted method of measuring wellbeing, nor how it pertains to wealth creation. We therefore decided to develop our own index using eight measures to identify those urban centres that are enabling citizens to achieve a higher level of wellbeing.”

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Power of sale properties must seek full market value: Ask Joe

If I purchase a power of sale property, will I get a great deal?

Let’s start by explaining “power of sale” in plain language: if I borrow money from a bank, and we agree in a contract that the property is my guarantee the money will be repaid, the bank can take possession of the property if I don’t replay the funds according to the terms in the agreement. The bank can then sell it, and give me any money that is left over after taking the amount I owe them.

It is a common misconception that power of sale properties are sold below their value. In fact, lenders are required by law to take reasonable steps to get market value for the property.

A power of sale purchase brings complicating factors. I strongly advise that potential power of sale buyers enlist the services of a real estate brokerage and a lawyer specializing in real estate.

It’s important to know that a power of sale property is sold as is. For example, the lender won’t know whether the basement has a history of flooding, or if there are other defects. Unlike a typical transaction, you can’t ask the seller about the condition of the property, or negotiate with them to repair defects. When you agree to purchase the property, you agree to buy it with defects and all. Any costs for repairs and renovations will be your responsibility.

For this reason, I recommend that you talk to your salesperson about your options for a home inspection. A home inspector, contractor or structural engineer may identify underlying problems with the home’s major systems, like heating and cooling, electrical, foundation and so on. You may be able a make your offer conditional on your satisfaction with the inspection results. However, depending on the condition of the structure or the terms of the sale, an inspection may not be possible.

There are also legal aspects to consider. For example, if a tenant or the owner is still living in the property, you may have to comply with certain provisions of the Residential Tenancies Act, 2006. A real estate lawyer can provide you with guidance on how to navigate such a situation. A lawyer’s review of the documentation from the lender is also a good idea, since the documents can be complicated and difficult to interpret.

Also keep in mind that the person who took out the mortgage may have a right that permits them to catch up on their mortgage payments and keep the property. This happens only occasionally in practice, but be aware that it can happen.

Power of sale proceedings are highly technical, and consumers should seek the advice of an experienced lawyer and real estate salesperson. Doing some research to understand potential issues and hiring the proper experts will help make a power of sale transaction a positive experience

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What’s driving talented workers out of Toronto? Five young people on why they left the city

Over the next 10 years, the population of the Toronto area will hit 8 million people. How will the city handle the rapid growth and fill its ever-increasing employment needs?

Already experts are pointing to a talent gap in Toronto — too few people to fill the jobs needed in information technology, the skilled trades and health care. Experts warn that without government, industry and schools working together, those skills gaps could grow even bigger by 2030, exacerbated by retiring baby boomers, Toronto’s high cost of living and lingering bias against blue-collar work. So what can the city do to retain talent and attract skilled workers?

We asked five people why they left Toronto to pursue work opportunities. Their reasons shed light on what Toronto could do to hold on to talent. Here’s what they had to say.

Ryan Radersma, 25

Left Toronto for: Los Angeles in 2017

Works in: Film and TV industry as a marketing producer

Why did you leave?

I had no choice! Toronto is my favourite city in the world, but after having sent out hundreds of applications to jobs I was qualified for without receiving even a single callback, I reached out to contacts I had made during a previous internship in L.A., and was able to score an interview on the very first job I applied for here. I’ve spent three years in L.A. now; I continue to apply for jobs in Toronto hoping to one day be able to move back … without success. Meanwhile, it’s a completely different world here — recruiters in the media industry reach out to me regularly to offer interviews I can’t accept due to my very limited work visa. I hope one day to be able to do what I love in my home country, but unless some drastic expansion of the Canadian media industry occurs, it doesn’t seem likely. And it’s a shame.

Samuel Yuen, 25

Left Toronto for: Apple, Cupertino, Calif., in 2017

Works in: Consumer electronics and technology as a product design engineer

Why did you leave?

Primarily, I left Toronto and moved to California because the Bay Area simply offers better opportunities in tech — both in terms of quantity and quality of opportunities when compared to what can be found in Toronto. It doesn’t even feel like it comes close. I found this especially true for hardware and product development jobs (electrical and mechanical engineers).

The available positions are much more compelling in the Bay Area in terms of both total monetary compensation as well as the opportunity to work on interesting and challenging projects or problems with large scope and impact. There’s also a good variety of tech companies, all of varying sizes, to choose from and work at. This gives me more flexibility in terms of career development, growth, and where I want to go next.

Another reason I left is because most of my friends from university also moved down to the Bay Area when we graduated. I think they also left Toronto for better opportunities and it’s way easier to move to a brand-new place with people you already know and hang out with. Lastly, I like being outdoors and I find that there are a lot more things to do in California (surf, ski, hike, etc.) and you’re a lot closer to the mountains! And I can’t complain about the weather in California.

Mecha Clarke, 28

Left Toronto for: Ghana in 2018, has returned, but is planning to go back

Works in: Art, graphic design and UX/UI experiential design as a volunteer

Why did you leave?

While my (former design) job was very rewarding, as I worked with great people and on very impactful projects, I had wanderlust and felt the strong desire to get out of Toronto for a bit. Although an extended vacation was my first thought, I quickly remembered that I would still need to be able to financially support myself and develop my skills, so I reached out to a non-profit volunteer organization whose objectives aligned with my vision for my first overseas volunteering experience. Working closely with the program co-ordinators, we were able to come up with a custom mandate geared toward building the capacity of a local NGO in Ghana in the areas of graphic design, website design, creative writing and more.

Something I think about now that I’m back in Toronto is how saturated the graphic design field is here versus the complete lack of that industry in Ghana, a country that prioritizes STEM occupations. Finding a design job in Toronto is a very strenuous task and, unfortunately, really feels like it’s entirely about who you know. In Ghana, my skills were a major asset to the organization and I secured many freelance projects that definitely had the potential to become full-time positions had I been interested. I do have plans to go back.

Eva Konca, 30

Left Toronto for: London, U.K., in 2015

Works in: Fashion and HR as a resourcing specialist

Why did you leave?

I felt there weren’t many opportunities in Toronto within the fashion industry and London was recommended to me by a few friends and acquaintances who had moved there (from Toronto). I was also curious to see what the lifestyle was like in Europe.

The main reason I moved was because of the opportunities to connect and network in Europe in the fashion field that wouldn’t be accessible or as rich in Toronto. Now I’m very well connected in the industry and can find work easily.

Chris Plosaj, 33

Left Canada for: Hong Kong in 2015

Works in: Digital strategy and e-commerce as a design and development specialist

Why did you leave?

I felt undervalued as a designer. The design industry is more mature in Canada, but there is also an oversaturation of designers. Also, Hong Kong provides a much better salary, less taxes.

I also left to have fun and to challenge myself and gain a new career perspective. In Hong Kong you often compete with the best and working in Asia I’ve learned more in a year than I did in three years working in Canada. Things move at a much different pace here.

Also, a big reason is Hong Kong’s approach to hiring. Many companies in my industry actively seek to hire some expat employees and everyone works through recruitment agencies. In fact, it’s pretty much the only way to get a job here and it means that you constantly have a network of recruiters and are being regularly approached about work opportunities. In fact, on a random holiday in Hong Kong, I met a recruiter that helped me find a job here and move within the same year. The rest is history.

Disclaimer: I lived in Hong Kong as a kid for some time, and although moving back here didn’t feel as familiar as you might expect, it was a bit easier to find work since I didn’t need a work visa.

 

One Toronto. Two possible futures. Ten years to get it right. Toronto has never been bigger, bolder and more successful – or faced so many serious problems. To attract talent and grow sustainably, we need to address the city’s transportation, affordability and infrastructure needs. If we ignore these threats, the inner city buckles. It’s time to start thinking about solutions.

 

TORONTO 2030: TEN YEARS TO GET IT RIGHT

Over the next year, the Star will tackle the biggest problems preventing our city from realizing its true potential

It’s 2020 and Toronto has never been bigger, bolder and more successful — or faced so many serious problems.

The next 10 years will transform our city into one of two possible futures.

In the first, we invest in the city’s transportation, housing and infrastructure needs. Torontonians find affordable places to live, the transit system works, green spaces flourish and talented workers flock to the city, increasing tax revenues — which leads to more investment.

In the second scenario, politicians squabble, we ignore the city’s needs and Toronto buckles, straining to cope with congestion, overwhelmed infrastructure and housing that’s out of reach for most.

The Greater Toronto Area’s population is projected to hit 8 million by 2030, it will be 10 million by 2045.

If we want a safe, livable city we need to start thinking about solutions now.

Over the coming year, the Star will take on a different challenge each month, turning to the brightest minds in the city to propose practical solutions that will make Toronto a better place to live.

 

THE ISSUES WE LOOK AT WILL INCLUDE:

februaryThe talent gap
marchTransportation gridlock
aprilGreening our environment
mayThe housing problem
juneInvesting in infrastructure
julyTechnology for the masses
augustLabour and the new economy
septemberMaking Toronto affordable
octoberSafety and crime
novemberWhy taxes aren’t working
decemberPulling it all together

What kind of Toronto would you like to see in 2030? Tell us your vision for the future at thestar.com/toronto2030 and #toronto2030.

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Borrowing to buy a house? Mortgage rates to fall following Bank of Canada rate cut

Variable rate mortgage holders are the big winners from the Big Six banks’ moves to match the Bank of Canada’s 50 point reduction to its trendsetting interest rate.

According to rate comparison  variable rate customers will see rates drop by half a per cent for interest cost savings of roughly $500 per year for every $100,000 of mortgage.

Those with adjustable-rate mortgages will see monthly payments fall by about $24 per $100,000, while variable-rate customers will continue to make the same monthly payment but their portion directed to principal will rise while the amount paid in interest will fall. Home backed and regular lines of credit will drop as well.

All of this follows the Bank of Canada’s decision Wednesday to lower its overnight target rate by 50 basis points to 1.25 per cent — the lowest since the 2008 recession — due to fears of a deepening economic downturn caused by the coronavirus and after the U.S. Fed imposed an emergency 50-basis-point cut.

There had been expectations that the banks would not pass on the full BoC cut, but Canada’s largest bank, RBC, led the way Wednesday evening, announcing a 50-basis point reduction to 3.45 per cent for its prime rate effective Thursday, which is used to set the rate at which banks lend to customers with good credit.

The other big banks — Bank of Nova Scotia, TD-Canada Trust, CIBC and BMO followed suit with National Bank of Canada confirming Thursday that it will also lower its prime rate by 50 points to 3.45 per cent as of Friday.

Rob McLister, RateSpy founder, said the the lowest widely available variable rate will drop immediately to roughly 2.34 per cent from 2.84 per cent, while the 2.59 per cent rate for the lowest conventional five year fixed-rate mortgages will fall in the short term due the lower prime and downward movement in bond yields which normally signal falling mortgage rates. He said fixed rates will trend lower as economic data continues to soften, “but we’ll have to wait and see by how much.”

Many observers expect the Bank of Canada to announce another 25 point rate cut next month — possibly another quarter-point cut before the end of the year, which would bring Canada’s overnight rate to 0.75 per cent.

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Bank of Canada believes this time rate cut will bolster housing market, not fuel froth

Bank of Canada Governor Stephen Poloz suggested Thursday that lower interest rates would not send home prices skyrocketing, but could instead help bolster consumer confidence and the housing market amid the spread of the new coronavirus.

Poloz told reporters following a speech in Toronto that the recent “shock” could weigh on people’s minds, possibly prompting them to be more cautious and hold off on making big purchases, a risk the central bank sought to get ahead of.

“My expectation is that we’ll see consumer confidence declining … as this unfolds, and that our hope is that lower interest rates will in some way mitigate that decline,” Poloz said.

Poloz’s comments came the day after the central bank cut its key interest rate by 50 basis points, to 1.25 per cent, citing the “material negative shock” the virus has given the forecast for the global and Canadian economies.

The Bank of Canada had held off from cutting its rate earlier in the year, but a lot has happened since the January rate announcement, Poloz noted. This includes the economic disruptions caused by COVID-19, which had prompted the U.S. Federal Reserve to cut its key rate the day before the Bank of Canada did.

“The outbreak and its effects could be more persistent,” Poloz said Thursday in a speech.

“Consumer and business confidence could be set back for a longer period of time, causing economic growth to slow more persistently. This could include longer-term layoffs, for example. At this point, we simply do not know.”

There have been other developments in 2020 as well, such as rail blockades and teacher strikes in Ontario, Poloz noted. The central-bank’s governing council, he added, had agreed the current dangers to the economy are more than enough to offset continuing concern about financial vulnerabilities.

“Indeed, declining consumer confidence would naturally lead to reduced activity in the housing market,” Poloz said. “So in this context, lower interest rates will actually help to stabilize the housing market, rather than contribute to froth.”

The Bank of Canada’s rate cut is expected to give homebuyers more purchasing power and has already led to drops in variable mortgage rates at commercial banks. Poloz, though, said the central bank expects the so-called B-20 mortgage guideline, which includes a stress test for loans that are not insured against borrowers defaulting, “will continue to improve the quality of the stock of mortgage debt.”

Even so, changes planned by the federal government and a federal regulator to the insured and uninsured mortgage stress tests could stoke further housing activity. Those tweaks are expected to lower the “floor” on the minimum rates, making it easier for borrowers to qualify.

Poloz called it a “desirable change,” because it will make the stress tests more responsive to actual interest-rate movements. Those rates have been falling, but the federal government has also proposed having a two percentage point “buffer” for the new benchmark rate for the stress tests.

If debt increases because interest rates are lower, Poloz suggested it would at least be “higher-quality debt” contributing to the rise.

“So that’s good reassurance to the central bank, which is trying to take account of these competing trade-offs,” he added.

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GTA Investment Transaction Stats – Q4 2019

Near Record Year for GTA Investment Activity
Total investments increased by 7% to $22.6 billion compared to $21.1 billion recorded in 2018. Driven by a record fourth quarter, overall investment volumes in 2019 rank second highest all time and was only outpaced by the record setting 2017 totals of $23.5 billion.

The GTA market continues to be the most desirable and stable market as investors maintain a diversified approach in maximizing their returns in this competitive landscape. According to Altus Group’s Investment Trends Survey in Q4 2019, Toronto was the only market that showed a rise in momentum on the location barometer. Although average transaction volumes remained flat in comparison to the previous year, the average deal size increased. For the first time, the fourth quarter witnessed total investments topping the $7 billion dollar mark with four asset classes each exceeding $1 billion. Apartment and industrial registered records with $2.1 billion and $1.4 billion, respectively, to go along with the residential land and office sectors which registered $1 billion and $1.3 billion, respectively.

 

Despite continual global economic and geopolitical concerns, 2019 saw the GTA market trend upwards in comparison to 2018 when investors cautiously navigated through the uncertainties and continued supply constraints. A combination of low interest rates, stock market uncertainty and the stability of real estate in Canada resulted in an increased appetite for real estate assets. According to Altus Group’s Investment Trends Survey, overall cap rates continued to trend downards from 5.02% in Q4 2018 to 4.98% in Q4 2019.

The land sectors (residential, ICI and residential lots) collectively accounted for $7.9 billion in Q4 2019. Despite a 6% decline compared to 2018, the land sectors once again lead the way as residential and mixed-use development projects continue to rise and transform the GTA landscape. The 2019 land sectors were highlighted by two landmark transactions. East Harbour Lands, a 38 acre site located just east of Downtown Toronto was acquired by The Cadillac Fairview Corporation for a total of $690 million. This transit-oriented mixed-use development will add nearly 10 million square feet of commercial space upon completion. The largest residential transaction in 2019 was the sale of the former Celestica campus at 1150 Eglinton Avenue East in North York, which was acquired by Aspen Ridge Homes for $347.8 million. The 60.5 acre site is planned to be a live, work, play mixed-use development which will have direct access to the soon to be completed Eglinton Crosstown LRT system.

The apartment market sector saw an increase in investments as it registered a total of $3.8 billion, a 40% increase from the previous year. As housing shortages and affordability persists, together with the ever-growing population in the GTA, the multi-family asset has proven to be one of the most stable and desirable commodities. Investors also ranked Suburban Multi-Unit Residential product as one of the top products to buy in Altus Group’s latest Investment Trends Survey Property-Type Barometer. Starlight Investments continued their aggressive acquistion strategy this year, highlighted by their end of year portfolio acquisition of 44 buildings in Ontario, 28 of which were located in the GTA. The overall acquisition totalled approximately $1.7 billion in investments. In addition to this portfolio, Starlight was a consistent investor throughout the year acquiring approximately $2.2 billion in multi-family assets, representing 57% of the $3.8 billion total investments in the apartment sector for 2019.

The industrial sector tied the residential land sector for the highest total investments in 2019, registering $4.4 billion representing a 31% year-over-year growth. As the availibility for industrial assets remains tight in the GTA market, sale prices and rental rates are expected to continue to rise. End-user investors are experiencing an increase in challenges as pricing and demand for industrial assets increase from all investor types. The two largest industrial transactions to take place in 2019 were the sales of newly constructed data centers, an emerging asset class which is beginning to evolve into a conventional asset class as demand for 5G and cloud computing expands. Investors are also seeing data centres as suitable for asset diversification and an attractive return on investment. The largest sale was 45 Parliament Street in the City of Toronto which was acquired by U.S. based Equinix REIT for a total consideration of $223 million. The second largest sale was 80 Via Renzo Drive located in the City of Richmond Hill which was purchased by AIMOCo for a total consideration of $215 million.

The retail sector was the most active in 2019; however, that did not translate to the overall lead in investment totals. The majority of trades were below $5 million which were primarily acquired by Canadian based private investors. The largest retail transaction registered in 2019 was the 50% interest sale of Stockyards Village in the City of Toronto for $88.5 million, acquired by RioCan REIT which now owns a 100% interest in the property. As the everchanging landscape within the retail sector persists, we will continue to see investors take advantage of the opportunity to re-position their assets to maximize their returns. 2019 saw multiple high profile shopping centres submit development proposals for large scale transformations. Some of the notable shopping centres include Yorkdale Mall, Sherway Gardens, Scarborough Town Centre and most recently Square One in the City of Mississauge, which proposes nearly 18 million square feet of density once complete. These assets benefit from their locations along major road networks and already-in-place transportation infrastructure as well as expansive surface parking lots primed for increased density.

For the sixth year in a row, we witnessed an increase in total investments in the office sector. 2019 registered a total of $4.1 billion which was a 2% year-over-year increase. With vacancy rates in downtown Toronto at an all time low of 3.2%, office assets continue to be in high demand as seen in three of the four largest transactions in the downtown Toronto area. The largest sale was Atrium on Bay, a 1.1 million square foot property which was acquired by KingSett Capital and TD Greystone Asset Managment for $640 million. Another notable downtown Toronto transaction, which ranks fourth in 2019, was the sale of 111 Peter Street acquired by iA Financial Group for a total consideration of $185 million. With the lack of supply of rental space in the market, owners of this nine-storey, 252,000 square foot property have commenced discussions with the City of Toronto for the development of five additional storeys atop the existing structure which would add an additional 92,000 square feet of rentable space.

As we enter the new decade, investors face increasing global economic uncertainties which will impact their decision making. Purchaser activity in 2019 was predominately Canadian based private investors. Institutional buyers acquired the larger assets and foreign investors were not prevalent. As the stability in the Canadian real estate market attracts Canadian and foreign investors, the GTA market will continue to be the preferred Canadian investment market.

“Investor demand will continue to be strong in 2020, with investors continuing to look for stable yields and opportunities, the challenge remains with the lack of product. Both ICI and residential land, apartment and industrial will continue to be the most sought after assets in 2020, with cap rates expected to remain flat and lower compression for assets with potential higher returns”, noted Raymond Wong, VP, Data Operations, Data Solutions at Altus Group.

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5 Reasons Why 2020 is The Year To Buy Real Estate

Lower mortgage rates, lower home prices, and the rise in buyer confidence means a busy year ahead for realtors

Thinking of buying a home? Well, 2020 could be your year! Real Estate experts across the country are optimistic this year will see an upswing in the market, and more first-time homebuyers will have the keys to their new front door.

Here’s what we know: 2018 and 2019 got off to a slow start, but 2020 has already proven to be a year with positive surprises. Here are some market trends that may sway your opinion and have you headed to your favourite real estate agent.

1. Lower Mortgage Rates
The Bank of Canada’s five-year benchmark qualifying rate dropped last year. Why is this important? Benchmark rates are interest rates set by the bank of Canada that are useful in financial contracts such as mortgages. Make sure you talk to your Real Estate Professional or Mortgage Broker to discuss your eligible rates.

When we see fast economic growth and higher inflation combined with low unemployment, mortgage rates tend to rise. When the economy is slowing down, inflation falling and unemployment increases, mortgage rates tend to decline. It gets tricky when these economic trends don’t co-exist.

Economists are forecasting a slower economy as the year progresses due to challenges in the export market and international trade. That’s actually good for mortgages. However, the national unemployment rate is low and expected to stay low as the demand for skilled trades continues to rise. Despite the discrepancy, the Canadian Real Estate Association remains optimistic.

2. BC Assessment
In Vancouver, housing prices have experienced a slight dip in pricing in some areas due to the BC Assessments released in January. This lowering of assessed value in some regions bodes well for buyers who are trying desperately to find affordability in an area that boasts some of the most expensive homes in the country.

3. More Secure Long-term Investment
There are some great financial incentives only available to homeowners. If you currently own or are thinking about buying, make sure you take full advantage of things like possible tax breaks and incentives, building equity, new housing rebates and more. Read this for a closer look.

4. Millennials Looking for Good investment
Now that Millennials are into their late 20s and 30s, they are moving away from rentals and entering the world of homeownership. Millennials now make up the single largest group of Canadian homebuyers.

With recent changes to the Stress Test, the BC Assessments causing prices to drop in that region, first-time homebuyers’ programs and incentives, and lower interest rates across the country, the planets are aligning in 2020 for millennials to break into the housing market.

In a recent interview with the Vancouver Sun Ashley Smith, president of the Real Estate Board of Vancouver says affordability is a critical factor for millennials when it comes to buying a home (especially) in the Vancouver region, adding that a condo may be an attractive option.

“While many people still dream of owning a detached house, others prioritize an urban setting over the traditional white picket fence. I do think there is a shift for many millennials more towards lifestyle rather than square footage,” Smith says.

In addition to price, Millennials are the driving force for technological advancements in the Real Estate industry and industry trends. Environmental footprint, electric car plug-ins, sustainability, and green space are all factors that come into play for millennials.

5. Expand Your Search: Get More Bang for Your Buck
We all know the location of your home can have a significant effect on its price. By looking slightly outside of a popular neighbourhood but still within its reach, you can increase the affordability factor, get into your home sooner, and experience more bang for your buck.

Not only will you find more housing affordability, but you may also see a decrease in property taxes. In addition to the price, location is often close behind. Once all the musts are checked off your list, like schools and amenities, spreading your wings just slightly outside the preferred area may give you many benefits without sacrifice.

Most real estate professionals and economists agree that 2020 has a bright future for the industry. Convinced the timing is right for you to take the leap into homeownership? Contact our agents today.

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A study on expanding housing options in Toronto

The City of Toronto is currently studying ways to increase housing options/supply and planning permissions in areas of the city that are designated as Neighbourhoods in the Official Plan.

These are areas that are sometimes referred to as the “Yellowbelt”, because they are seeing very little intensification and, in a number of cases, actually losing population. (They’re also colored yellow in Toronto’s land use map.)

Ultimately, the goal is to encourage more “missing middle” type housing forms; housing that is denser than single-family homes but smaller in scale than say mid-rise housing like Junction House.

Here are a couple of interesting charts from the City. Based on Toronto’s Official Plan, “Neighbourhoods” make up 35.4% of the city’s land area.

In Toronto’s Zoning By-law, the “Residential” category makes up 47.1% of the city’s land area.

Digging deeper, 31.3% of Toronto’s total area is zoned for only detached houses — which would mean no missing middle type housing. But 15.8% of the city’s total area is already zoned to permit other types of low-rise residential buildings, such as duplexes and triplexes.

So why isn’t more of that happening?

As we’ve talked about before on the blog, the problem is that it is exceedingly difficult to make the math work on projects of this scale, which is why most developers don’t want to do them. The web of bureaucracy that you need to navigate in order to build anything in the city is also imposing for non-developers (and developers really).

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