New condo sales across Toronto’s suburbs jumped 106% this summer

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

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

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

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

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

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

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

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

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

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

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Toronto condo rents fall over 9% despite record-breaking market activity

Toronto’s renters sprung into action over the third quarter of 2020, signing a record number of new rental condo leases for the three-month period as listings surged.

And, with so much choice for renters in the market, investor-owners were forced to drop prices for their condo rentals, according to third quarter data published recently by market research firm Urbanation.

Average monthly rents for Toronto region condos fell by 9.4 percent annually to $2,249 during the third quarter. This marks the lowest rent level observed by Urbanation since the first quarter of 2018.

As more supply entered the market, condo renters signed a record 13,140 leases for units across the Toronto region, up 39 percent from the same quarter last year. While that’s an exceptionally high number of leases signed, it still pales in comparison to the 23,288 condo rentals that hit the market during that same period.

By the end of the quarter, Urbanation said there were 9,154 active condo rental listings on the market, four-and-a-half times the number available during the same point in 2019.

In a media release accompanying the rental data, Urbanation President Shaun Hildebrand said that weakness in Toronto-proper, especially the downtown condo market, had weighed down the overall market.

“The GTA rental market showed some improvement in the third quarter within more suburban areas, while experiencing weakened conditions in the downtown areas as renters reevaluated the costs of living in the central core as most offices, post-secondary schools and entertainment venues remained closed,” said Hildebrand.

“While it was encouraging to see the large increase in lease activity in the third quarter as renters took advantage of recent discounts, the market will continue to face challenges heading into 2021 from restrained demand caused by COVID-19 and elevated supply levels,” he added.

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Canadian home prices rise in September as housing market firms, according to Teranet data

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

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

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

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

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

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

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

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Guide to buying preconstruction condos

In this blog I will try to explain as much as possible (and the topic is extensive) about the process and key factors when buying a preconstruction condominium. The below applies to Ontario, and more specifically the Greater Toronto Area (GTA).

Selecting the Location

Arguably the most important factor when buying real estate, especially if one of the goals is capital appreciation, is the location. Quality location is not always easy to determine, one needs to look at the current surroundings, future plans and developments of the area, and the possibility of gentrification. Less than desirable areas now may look much different in 10 years after a number of condo projects have been completed. Proximity to public transit can not be understated, ease of access to public transit has a large impact on the value of the surrounding area. Additional examples of questions surrounding the location are: how long it will take to get downtown, is the building currently in development next to the condominium a new arts center or homeless shelter, etc. You also need to look at all the negative factors of the surrounding area (e.g. high crime rates) to decide whether the project is worth investing in.

Choosing the Right Developer

Not all developers are the same, the quality they put out differ, and in worse case scenarios they never get the construction off the ground. I have written a blog regarding already, there have been many around the GTA in the recent years (Cosmos, Kennedy Gardens, to name a few). If you happen to be the unlucky one to invest in one of those, especially if this is your first venture into preconstructions, it could cause a major setback in any future ventures down the road.

Build quality is also very important, poor quality construction will result in a cheap look and more repairs. A quick google search will give you a good idea of which builders are better than the others.

The bottom line is, do your due diligence and select a builder that a has a long history of successfully completing projects in Canada.

Purpose of the Purchase

There are pretty much two options, you either buy it as an investment or for your own enjoyment. In both cases, cost will be a main factor. The developer will charge different amounts for exactly the same unit depending on the location of the unit within the building. Other factors that affect price include:

· Proximity to the elevator, garbage chute, and facilities: units next to these will be noisier and experience more hallway traffic.

· View: no need for a detailed explanation here, a great view will demand a premium price.

· Floor premium: generally, the higher the floor the higher the cost, the odds of having a good view on the 25th floor are better than on the 5th floor, also the noise from the street will be more noticeable on the lower floors.

· Layout: not all units will have perfect layouts, the developers are limited by the footprint, while some units will be very good, others may have long hallways with wasted space. For small units where space is at the premium this is a very important factor to consider.

· Ceiling height: 8 foot ceilings feels and look quite different than 9 or 10 footers, some projects have consistent floor heights, others differentiate starting at certain floors.

It’s clear that units on higher floors with great views away from the garbage chute will be more expensive than second floor unit with facilities next to it, so which one should you buy? Are you buying it for yourself or as an investment? If as an investment, your main concern should be the return on investment and less expensive units will most likely make more sense for you. You maybe able to get a bit of a premium when renting higher floor units but it’s likely offset by the higher cost of purchase. If you are buying for yourself the cost is still very important, but so is the ability to enjoy your own property.

Cost per Square Foot vs. Total Cost

When buying a house, you never hear about cost per square foot. When purchasing a condo, both total and per square foot costs are important factors needed to be considered. Let’s use an example of two units that are the same size (500 square feet): one is $1,000 per square foot, the other is $1,100. The more expensive unit has a great layout with no wasted space, the less expensive unit has a long hallway and essentially 80 square feet that cannot be properly utilized. In this scenario, the more expensive unit is actually cheaper when calculating the usable space. The cost per usable space of the less expensive unit is now $1,190. Since the layout is better, buying the $550,000 unit maybe a better deal than buying $500,000 unit.

Using the very same example there is an argument to be made that the $500,000 unit is still the better buy. This is especially true when the unit is purchased as a long-term investment. The owner may not be able to charge much premium for renting the $550,000 unit, and even so, the small rent difference would be offset by the mortgage payments, property taxes, etc.

Calculating Cashflow

What is cashflow? In simple terms it is the difference between cash coming in and cash going out. The cash flow can be positive (more coming in than going out), neutral, or negative. If the condo is owner occupied the cashflow will obviously be negative (make sure you can afford to carry the costs). If you are an investor in the GTA, the bad news for you is that with the current prices, putting 20% down, you will not be able to generate positive or neutral cashflow and therefore will be negative (how much will depend on the project and unit). To calculate the cashflow you will deduct all payments related to the condo (mortgage, condo fees, insurance, property taxes, repairs, etc.). Before investing in the condo make sure you are able to carry the negative cashflow for an extended period of time. Keep in mind that both rental income and expenses will go up, but one may outpace another (expect increase in condo fees, the developers are known for underestimating the amount).

Calculating Rental Income

There is a difference between calculating cashflow and rental income, you may be in a negative cashflow position yet still be generating a profit which will further negatively affect your cashflow since taxes will be paid. The biggest factor here are mortgage payments. For example, you are in a negative cashflow position of $500 each month, your monthly mortgage payment is $1,200, of this amount $800 goes towards the principal repayment, and $400 is mortgage interest expense. In this scenario, you are generating a negative cashflow of $500 per month while still creating a monthly taxable profit of $300.

Costs to Purchase

There are costs associated with a purchase of any real estate such as land transfer tax and legal fees. In addition, you will pay fees associated with the acquisition of a brand new unit from the builder and it is very important you familiarize yourself with what you can expect as the amount can be significant. Since every condo builder is required to be registered under Tarion Warranty you will need to pay Tarion fees (up to $2,034, the amount is based on the purchase price).

The most important fees to get familiar with are development charges, I can’t emphasize enough the fact that you need to ensure the fees are capped and you need to know exactly how much you will be paying. What are development charges? Basically, the municipality is charging exuberant fees to the builder for allowing them to build the project, the fees tend to go up each year, and with the municipalities being strapped for cash, the trend to increase the fees is going to continue, in some cases they may double from one year to another. If the fees are not capped in your contract you may end up paying a much higher amount than you would expect, either way expect anywhere between $5,000 to $30,000 or even more in development fees depending on the project and your unit.

You may also be responsible for utility hook up fees (expect a few thousand for this).

Assignments

This topic probably deserves a blog on its own, therefore I will just touch on the basics.

Assignment is simply the ability to buy or sell a unit that the developer already sold to a buyer.

Building a condo takes many years, some investors already have an assignment (selling before the unit is completed) on their mind, for others simply circumstances change, they need cash, the value went up and they want profit now.

To carry on with the assignment there needs to be a clause in your contract with the developer allowing assignments (the developers charge assignment fee, some projects don’t permit the assignments), since the unit is not yet completed the purchaser is not buying a unit, but the right to own the unit when it’s completed.

The seller is called the assignor, the buyer is called assignee, the assignee better be prepared to have plenty of cash on hand as they should be able to pay for the deposit the assignor paid to the developer and the profit on the unit. The assignee will also need to pay for Harmonized Sales Tax (HST), development charges, etc.

Not all assignments are sold at a profit, if you know what you are doing you can score a great deal, it all depends how desperate the assignor is to unload the unit.

Assignments are harder to find as they are not advertised on MLS.

10 Day Cooling Off Period

The cooling off period is pretty unique among the real estate transactions, unlike resale or non-condo residential preconstruction which doesn’t allow for a cooling off period, brand new condominiums purchased from the builder by law do allow the cooling off period. What this means is you can change your mind and get the deposit back during a period of 10 days (keep in mind it’s 10 days, not 10 business days).

The 10 day period starts from the time you receive copy of signed purchase and sale agreement or the disclosure statement, which ever comes first.

You have the right to cancel the agreement within 10 days of any material change to the disclosure statement.

During the 10 day period you should have your lawyer review the agreement. Additionally, talk to your mortgage broker regarding pre-approval.

HST Rebate

HST rebate rules apply to all preconstruction residential real estate. The sale of the unit is a taxable sale (meaning the seller is charging the consumer sales tax), no different than buying a car from a dealer, or a computer from Staples. The difference is there are rebates, both federal and provincial, available for the purchase of new real estate. The federal portion of the rebate is available up to a purchase price of $450,000. Sadly, the vast majority of the new condos purchased around GTA will be more than the threshold, thankfully, the province of Ontario doesn’t put any cap on the maximum price purchase and you will qualify for the rebate if you purchase the condo as principal residence, or as an investment property and have a 1 year residential lease signed in place.

In majority of cases the advertised price includes the amount of HST and is discounted by the amount of the rebate. The maximum rebate available for the provincial part of HST is $24K if you are purchasing a principal residence the rebate will be assigned to the builder, if you are buying it as an investment you will need to pay additional $24K to the builder and apply for $24K rebate from CRA. It usually takes a couple of months to get the refund from CRA.

Why Preconstruction Instead of Resale

Number of factors come into play when choosing preconstruction over resale. The buyer may not be ready or willing to own the unit now but is forward thinking and expects to be ready to own a condo in few years. The deposit structure also plays a significant role, instead of dishing out the full amount of the deposit, the builder will often have a deposit schedule spread out over number of months or even years.

Interim Occupancy Period and Fees

Occupancy period is when the developer allows you to move into the unit before the title is transferred. It takes a long time to complete the project, the lower floor units are completed earlier than higher floor units therefore the occupancy period will likely be longer for lower floor units than higher floor units. During that period, you will not be making mortgage payments, but you will be paying occupancy fees to the developer until you take the ownership. The occupancy fees are governed by Ontario Condominium Act, and the structure of the payments is designed to allow the builder to break even abd not to make a profit.

During the occupancy period the elevators will be in service, on the other hand amenities such as gym and swimming pool will not be open, you will also experience noise and all other inconveniences associated with construction.

Design Options

Around one year before occupancy you will be invited to pick your design options, this is not the time to upgrade or downgrade, this was done at the time of signing the contract, but it is the time to select the finishes matching your taste. As a side note if you are buying the unit as an investment, hopefully you have selected no upgrades when signing the contract, as there is no financial benefit of upgrades if you are renting out the unit.

Title Transfer

Title transfer usually occurs approximately 3 to 12 months after your occupancy period begins, the condo corporation can be formed, you will make the final and full payments for the unit, arrange the mortgage, pay all the closing costs etc.

Tarion Warranty

Tarion warranty is another topic deserving a blog on it’s own, instead of copying what can be found on the Tarion website please have a look here at what you need to know in more details, the main topics are below:

· Tarion offers defects warranty as well as deposit protection warranty

· All condo builders must be Tarion registered

· Defects warranty expires in the following periods: 1, 2 and 7 years, the longer the warranty, the less it covers.

· The warranties are for within units and common elements.

· PDI (Pre-Delivery Inspection) happens before you receive the keys to your unit.

· 1-year warranty claims can be done during first and last 30 days of the year, 2 and 7 year warranty claims can be made anytime.

Condo Fees

Condo fees are another significant factor when making purchase decisions. When buying resale, the history of the monthly fees is already established, and by analysing the status certificate and the reserve fund you can predict with a good amount of certainty what will happen in the near future. With preconstruction condos it gets more complicated. The developer may advertise low initial monthly fees to attract the buyers, and there is a likelihood of increases a few years down the road, in general here is what you need to take into consideration:

· Small boutique condos with limited number of units will have higher monthly fees than large projects

· The more amenities the more the fees

· Luxury buildings will be more expensive to maintain than more down to earth projects.

There is good news for new condo owners. Back in the day older condos were not mandated to have a periodic reserve studies done. The current requirements mandated under the Condominium Act regulate the matter in a very strict manner; the studies have to be done every 3 years, and the minimum balance in the fund has to be maintained. This requirement hopefully reduces the amount of unexpected condo fee increases and special assessments.

Plan B

Here is a story I hear all the time, in 2014 I bought a condo for $300K, the title transferred in 2018, the value at that time was $500K, and I rented for a year to get the HST rebate. Another unit sold on assignment for $150K profit. Great, guess what, this will not happen all the time, and will certainly not continue forever. It is always wise to have a Plan B if the market turns south. Be prepared to hold onto the investment if your initial goal was a quick flip. Patience is one of the most important virtues when investing in the real estate. The cost of buying and selling real estate is very high, it will hurt you even more if you happen to be forced to sell when you don’t want to.

Developer’s Unit Allocation

By the time the official opening for the public happens, up to 80% of the units may already have been sold. This means that if you waited, did not want to use an agent, or simply missed the news, you will have no chance of getting the better units, and the prices may have already gone up.

The typical unit allocation, in chronological order, is as follows:

· Family and friends: no, not like Lowe’s family and friends where everyone is related, it is a narrow and close circle. Unless you are family or a friend, you are not getting first pick on a unit.

· Platinum VIP agents: each developer deals with a very small group of preferred agents, those agents will be allocated a certain number of units which in turn will be sold to their best clients (e.g. investors with deep pockets). If you are a rookie investor and this is your first purchase, you may not be able to get a unit in this phase either.

· VIP agents: this is where you have a good chance of getting some decent units, the agent may offer you some extra incentives for representing you.

· All other agents: by this time 50-70% of the units have already sold, but still some good units are available and possible extra incentives from the agent representing you.

· Pre-registrants.

· Grand opening to the public: this would have been you unless you have read this blog, waiting outside for hours to find out that 80-90% of the units have already been sold.

With each phase the choice gets smaller and the price may get higher. Your goal should be to get in early and scoop the best unit available. There is an outside chance that you may get a decent deal (the price will not be reduced but you may get free upgrades) when there are a few units left lingering around and the developer wants to close the sales office, but in general, don’t wait.

Worksheets

I have been asked this numerous times, what needs to be done to get the unit with an agent, and what are worksheets. Worksheets, in the most simplest of terms, is an information sheet your agent will submit on your behalf to the builder and will include your choice (usually 3 to 5) of preferred units along with personal information such as your name, current address, SIN along with proof of identity. Usually a worksheet submission date is set by the developer. By that time you need to be familiar with the project, units, pricing, layouts etc. The worksheet submission does not constitute an offer, you are not committed to buy until you sign a purchase and sale agreement, and even then, there is a 10 day cooling off period.

Hopefully within a few days you will receive the answer from your agent advising you the unit has been allocated to you, and you can then proceed with a purchase.

After reading this blog, my hope is that you have gained a basic understanding of the process of buying preconstruction condominiums. It does not cover every detail but should at the very least help you understand the basics and avoid some mistakes first-time condo buyers can make.

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Toronto condo prices rise over 8% even as new listings surge

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

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

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

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

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

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

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

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

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

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

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

source: livabl
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Tips On Buying A Pre-Construction Home In Ontario

It can be challenging to navigate the new home buying process.

We are here to help – and have compiled a few tips on purchasing a pre-construction home or condo.

1. Research your builder
The Ontario Builder Directory (OBD) is an online resource that can help you confirm if your builder is licensed to build new homes in Ontario.

You can also use the directory to learn more about the builder – for example, how many homes they have built, what their claims history is and, in the case of condos, what projects are underway or have been completed.
A feature recently added to the OBD is Conviction Search, which allows you to see whether a particular company or individual has been associated with any illegal building convictions during the past 10 years.

2. Understand your purchase agreement before you sign
Your purchase agreement is one of the most important documents in your new home buying process.

This purchase agreement is a legal and binding contract between you and the vendor, so it is important that you have a lawyer review it, before you sign.

Your lawyer can also help you understand the Tarion Addendum attached to your purchase agreement, which includes closing dates and potential delays, closing fees and other possible costs. Your lawyer can also explain when your Agreement may be terminated and, if that happens, how your deposit will be protected under the Addendum.

3. Learn about your warranty coverage
Under the Ontario new home warranty and protection plan, all new homes have a warranty for, among other things, workmanship, materials, Ontario Building Code violations, water penetration and defects in your home’s structure and systems. The warranty coverage is broken into one-year, two-year and seven-year warranties and it is important to understand what types of defects and conditions are covered during each warranty period.

4. Prepare for your Pre-Delivery Inspection (PDI)
Before you take possession, you will have an opportunity to walk through your new home with your builder to make sure that nothing is missing, damaged or incomplete.

Review Tarion’s PDI Checklist before your walk-through, so you’ll know what to look for. The PDI Checklist is a general guide so you should add your own checkpoints based on your property and its unique details.

5. Extra tips for condo buyers
Buying a pre-construction condo is slightly different from purchasing a new house. Ask your real estate lawyer to inform you about your rights and responsibilities, including the following:

a. Cooling off period
If you are purchasing a new condo, you have an initial 10 days under the Condominium Act to cancel a sales agreement. During this time, make sure to review your purchase agreement and the disclosure statement.

b. Interim Occupancy
You might move into a new condo before the condo project is completed and registered. This is called interim occupancy. Make sure to ask your real estate lawyer about the following:

  • Condominium ownership
  • Monthly payment of interim occupancy fees
  • Duration of interim occupancy
  • Other rights and responsibilities during the interim occupancy period.
  • Following these tips will help take some of the worry out of the purchase of your new home or condo. Please share this with family and friends who are in the market to buy a new home in Ontario.

The goal of this blog is to provide you with general information about the warranty process by sharing real experiences from new homeowners. The blog should not be relied upon as legal advice. For privacy reasons, we will not address or resolve current cases in a public forum, so any comments or questions that are posted on this site that describe individual cases cannot be discussed. If you have a question about your warranty or Tarion generally, we would be pleased to discuss your issue, in the context of your particular circumstances and in confidence. We exercise reasonable care to avoid offensive, illegal or defamatory content from being posted, as well as comments that are intended solely for self-promotion or considered to be spam.

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Basements Can Flood for Many Reasons

While the City of Toronto is working to improve its complex system of underground pipes, sewers and catchbasins, these improvements alone cannot completely protect a home from basement flooding.

During heavy rain, the sewers can become overloaded. It is essential that homeowners take steps to help protect their home from basement flooding.

There are a number of reasons why basements flood, including:

  • When stormwater or ground water seeps into the home (drainage failure) due to:
  • A crack or leak in your home’s foundation, basement walls, or basement windows or door
  • Poor lot grading or drainage
  • Failure of the weeping tile system (foundation drains)
  • Failure of a sump pump (in some homes) used to pump weeping tile water
  • Overflowing eavestroughs
  • Leaking or plugged downspouts
  • A sewer back-up caused by a blocked or overwhelmed sewer pipe.
  • Blockages are typically caused by items that are incorrectly flushed or poured down the drain. Tree roots and broken or cracked sewer pipes can also cause blockages.
  • Overwhelmed sewer pipes can happen during extreme rain. If the sewers fill beyond capacity, the water will travel backward in the sewer pipe and into the home.

What to do if Your Basement is Flooded

If your basement is flooded, it is necessary that you take appropriate action to protect your home, your health and safety. The City also offers a Basement Flooding Protection Subsidy of up to $3,400 per property.

How to Reduce Your Risk of Basement Flooding

Every home is at risk of basement flooding, even if it has not happened before. Water in your basement is most likely to occur during a heavy rainfall, or when snow and ice is melting.

You can take steps to help reduce or prevent it from happening.

What the City is Doing to Prevent Basement Flooding

Basement Flooding Protection Subsidy Program
The City offers owners of single-family, duplex and triplex residential homes a subsidy of up to $3,400 per property to install flood protection devices.

Basement Flooding Protection Program
The City is taking steps to stop the overloading of the sewer system and reduce basement flooding.

Mandatory Downspout Disconnection
Disconnecting downspouts from the sewer system is mandatory. It can reduce the risk of basement flooding and releasing polluted rainwater into our local waterways.

Preventative Maintenance
The City regularly inspects, cleans and maintains the sewer system to ensure it is in good working order.

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Sellers are back in control of Toronto region’s housing market

The Toronto region’s housing market moved back into seller’s territory in September with new listings declining and home sales continuing at a rapid pace.

Resale listings had been on the upswing for four consecutive months, but fell by nearly 16 percent overall in September. This caused the important market barometer — the sales-to-new-listings ratio — to reach 65.8 percent in the region, indicating the reemergence of a seller’s market. In August, the Toronto housing market had been in ‘balanced’ territory, with a sales-to-new-listings ratio of 52.6 percent.

As Diana Petramala and Victoria Colantonio, researchers at Ryerson University’s Centre for Urban Research (CUR), pointed out, the increase to the ratio means sellers now hold more of the bargaining power in the Toronto region’s market.

“As such, the MLS average sales price [in the GTA] was up 14 percent year-over-year. The price of all types of housing rose at this rate, with the exception of condos,” they wrote in a research brief published last week.

The researchers were alluding to the fact that the overall shift to seller’s market conditions was driven primarily by skyrocketing demand for detached homes and other ground-related property types brought on by the pandemic. Condos are the one segment where buyers likely still hold the upper hand, especially in the City of Toronto and its downtown core.

Active listings for condos in the City of Toronto reached a record high in September, with enough listings currently available to satisfy three and a half months worth of buyer demand, Petramala and Colantonio wrote.

This helps explain how the Toronto region’s suburban areas saw a relatively modest 21 percent increase in new listings in September, while the City of Toronto, where condos figure more heavily into the market composition, saw a 50 percent increase.

“[T]he condo market has lost favour among homebuyers. While prices are still rising in the condo market, they could change direction if listings continue to rise as they have been in the last seven months,” the CUR researchers wrote.

Some have speculated that investor-owners attempting to offload their former Airbnb units or long-term rentals on the resale market are behind the new condo listings surge, but Capital Economics’ Stephen Brown said in commentary published last week that other factors are likely at play.

“[W]e suspect the far bigger factor is that there has been a huge shift in demand among owner-occupiers. Specifically, due to health concerns and increased working from home, many people are trying to sell apartments and purchase more spacious single-family homes,” wrote Brown.

Petramala and Colantonio expressed a similar view, writing that low mortgage rates and Millennials are driving demand for ground-related housing outside of the city-proper.

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Canadian real estate fundamentals

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

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

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

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

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

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

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

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Google Announces Massive New 400,000 Square Foot Office in Toronto

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

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

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

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

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

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

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

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

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

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Detached home prices just rose over 20% in 10 Toronto suburbs

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

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

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

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

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

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

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

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

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

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Percentage of young Americans now living with a parent

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

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

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

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Single-family home prices kept accelerating across Canada in September: RBC

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

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

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

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

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

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

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

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

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

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Sales and listings continue to rise as Toronto real estate market outperformed by suburbs

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

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

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

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

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

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

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

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Toronto Sets New Record for Home Transactions in September as Sales Soared 42%

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Toronto’s housing market just broke September sales record

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

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

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

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

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

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

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

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

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

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

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

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Toronto-Area Apartment Prices Have Risen Nearly 80% in the Last 5 Years

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

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

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

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

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

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

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

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

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

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Toronto’s Luxury Real Estate Market Remains ‘Resilient’ Amid Pandemic

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Why some Canadians have only 5-7 months before their home buying window closes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Sales of New Homes in GTA up 217% in August: BILD

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

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

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

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

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

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

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

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

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

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

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

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