Canadian new home prices see biggest jump since 2006: StatsCan

The price of a new home in Canada increased on both a monthly and yearly basis during October as supply constraints persisted in some regions.

In its New Housing Price Index for October 2021, Statistics Canada reported that national new home prices grew by 0.9 per cent from September to October. This marks a slightly higher increase compared to the last four months, the federal department noted. On an annual basis, new home prices rose 11.5 per cent in October, a growth rate that has not been seen since 2006.

Out of the 27 census metropolitan areas (CMAs) analysed in the report, monthly prices increased in 15 of those communities, while 10 recorded no change and two CMAs saw prices drop. Year-to-year, prices were up in all 27 CMAs.

The price of a new home in Canada increased on both a monthly and yearly basis during October as supply constraints persisted in some regions.

In its New Housing Price Index for October 2021, Statistics Canada reported that national new home prices grew by 0.9 per cent from September to October. This marks a slightly higher increase compared to the last four months, the federal department noted. On an annual basis, new home prices rose 11.5 per cent in October, a growth rate that has not been seen since 2006.

Out of the 27 census metropolitan areas (CMAs) analysed in the report, monthly prices increased in 15 of those communities, while 10 recorded no change and two CMAs saw prices drop. Year-to-year, prices were up in all 27 CMAs.

Kitchener–Cambridge–Waterloo in southeastern Ontario experienced the largest increase in new home prices, where values jumped by 3.8 per cent month-to-month. According to data from the Kitchener Waterloo Association of Realtors, the benchmark price for all residential properties was $803,900, up 2.5 per cent from September.

Similarly, London, Ont. saw new home prices increase 2.4 per cent from September to October, with the London St. Thomas Association of Realtors reporting a 2.9 per cent rise in the benchmark price for all residential properties to $613,900.

Compared to the other 27 CMAs, Kitchener–Cambridge–Waterloo also reported the largest annual price gains, with the cost of a new home climbing 29.2 per cent year-to-year.

“Given the proximity of the two cities to Toronto, demand for homes has also been coming from buyers outside the London and Kitchener–Cambridge–Waterloo region, driving home prices further up in a market with persisting low supply, and creating a barrier for some local buyers,” explained the StatsCan report.

On the opposite side of the country, Victoria, B.C saw monthly new home prices jump 3.3 per cent, the largest increase on record since May 2002. Active listings in the city diminished “due to sustained demand.” In October, there were 1,036 homes available for sale, 7.8 per cent fewer than the previous month according to the Victoria Real Estate Board.

“If competition for homes continues in Victoria, upward price pressure should persist given the historically low supply,” said the report.

By province, new home prices in Ontario, British Columbia and Quebec were up 1.2 per cent, 1.1 per cent and 0.2 per cent month-to-month. Alberta, Nova Scotia, Prince Edward Island and Newfoundland and Labrador reported no changes in new home prices during October.

Major provincial cities such as Toronto, Ottawa, Vancouver and Montreal saw monthly new home prices grow 1.3 per cent, 0.5 per cent, one per cent and 0.2 per cent from September to October.

/by

Toronto’s Tallest Ten Towers Waiting In Line for Approval

In Toronto, you’re never very far from a crane. There are so many here — particularly because of the huge demand for new housing — that, in fact, we have more cranes than any other city on the continent, over 220 in the 416 alone. While our streets and our skylines are rapidly changing, there is always another raft of buildings waiting in line behind the scenes at City Hall for their approval. It can take years before the final approval, so here we look at a number of proposed new towers that may some day add to our growing urban canyons. Here’s our list of the top 10 tallest towers that are still awaiting their judgement days.

Let’s start our Top Ten at #14; 310 Front Street West. This mixed-use residential and office tower is currently under review after being submitted for Zoning By-Law Amendment (ZBA) in April of this year. If approved as planned, H&R REIT’s Hariri Pontarini Architects-designed building would stand 69-storeys/235.5 metres tall, and become home to 560 units. The tower could also have a landmark feature of strobe lights shooting out from its top level into the sky, making it hard to miss. They’re also the reason we snuck this one into our Top Ten list.

Now, into the actual Top Ten list, at #10; 372 Yonge. Designed by DIALOG for Yonge & Gerrard Partners Inc, Turbo-Mac Ltd, and Trimed Investments Inc, 372 Yonge was submitted to the City in July of 2020 for an Official Plan Amendment (OPA) and ZBA. The initial application was refused, but an updated proposal — located on the northwest corner of Yonge and Gerrard streets — was resubmitted, including for Site Plan Approval (SPA) in September. If approved, the building will stand 74-storeys/248 metres tall, and be home to a total of 415 residential units.

At #9 is 2180 Yonge. With multiple buildings designed variously by Pelli Clarke Pelli Architects, Hariri Pontarini Architects, and Adamson Associates for Oxford Properties Group, and CT REIT, 2180 Yonge was submitted to the City in December of 2020 for ZBA. The proposal includes five towers on the southwest corner of Yonge and Eglinton with a total of 2,701 residential units. The tallest building here is proposed at 70 storeys/253.5 metres.

At #8 is 475 Yonge. OPA and ZBA applications have been made to facilitate the redevelopment of the site for two BDP Quadrangle-designed towers for KingSett Capital. While the shorter 75-storey/246.4 metre tower would place at #11 this list, the taller 78-storey/255.25 metre tower on the northwest corner of Yonge and Wood streets puts the whole submission into the Top Ten. Documents were submitted in September and October of this year, and if approved, the towers would house 785 and 826 and residential units.

At #7 is 11 Bay. This proposed development — designed by Daoust Lestage Architecture and Hariri Pontarini Architects for QuadReal Property Group and Barney River — is to be an integrated 54-storey/269.45 metre office tower with retail and a conference facility, located at the prime intersection of Bay Street and Queens Quay. It is currently awaiting ZBA approval from the City, which was applied for in September of 2020.

At #6 is Chelsea Green. This site has ZBA approval, but awaits the Planning department’s go-ahead on the SPA for the proposal. The tallest building here is an 86-storey/283.53 metre-tall condo designed by architects—Alliance for Great Eagle Holdings on the southwest corner of Gerrard Street West and Yonge Street. Along with residential use, other buildings on the site include a hotel, office space, and retail, while a new park is also proposed for part of the property.

At #5 is Union Centre. Designed by the renowned Bjarke Ingels Group for Westbank Corp and Allied Properties REIT, Union Centre had its OPA and ZBA applications approved by the City last month, but still awaits ratification by the OLT. Union Centre’s SPA remains under review by the City. If built as planned, the building will stand 54-storeys/298.00 metres tall, and be home to 1.7 million ft² of office space at Simcoe and Station streets, and be topped by a terraced green roof.

At #4 is Union Park. Designed by Pelli Clarke Pelli Architects and Adamson Associates Architects for Oxford Properties Group, the developer applied for ZBA in August of 2019, and is still waiting on a decision from the City. If approved as proposed, the development would consist of four towers, two residential towers and two office towers, the tallest of which would be a 58-storey/303.26 metre-tall office tower. At over 300 metres, it would be considered a “supertall.”

At #3 is the taller tower at Gehry Towers. Designed by the renowned Gehry Partners with Toronto’s BDP Quadrangle, the project is being developed by Great Gulf, Dream Unlimited, and Westdale Properties. Originally proposed as Mirvish+Gehry by Projectcore, applications to the City for ZPA and SPA were submitted in 2012 and 2016, respectively. Changes meant that the ZBA was reapplied for in 2014, and that received approval. Further changes, however, meant another resubmission in 2018, and a revised version of it remains under review. A revised SPA also awaits approval. Once this development gets the go-ahead, the two towers would stand at 84 and 74-storeys (308 and 266.5 metres) on the block bordered by King, Pearl, Ed Mirvish Way and John Street, and house a respective 1170 and 868 residential units, with retail, office, and institutional space in the podiums. The taller building would be another supertall.

At #2 is 212 King Street West. It is a proposed 80-storey/311.8 metre mixed-use building designed by SHoP Architects for Dream Office REIT and Humbold Properties, on the northwest corner of King Street West and Simcoe Street in the heart of Downtown. The developers submitted applications for ZBA in December of 2020, and for SPA in June of this year. Both applications are currently under review. If approved as planned, the supertall building would house a total of 588 office and rental units.

Way up at the top at #1 is the incredibly skinny 1200 Bay. Designed by Swiss starchitects Herzog & de Meuron Architekten with Toronto architects BDP Quadrangle for ProWinko and Kroonenberg Group, this proposal is an 87-storey/324 metre mixed-use building that would house total of 332 residential suites across 71 floors, with 13 floors of office space and two floors of retail closer to ground level. A restaurant would sit up at the very top. Applied for in June of 2020, 1200 Bay awaits a decision from the City on its ZBA application.

A final note to add would be to include a building that is — unlike any of the other buildings in this list — actually already under construction. The One, an 85-storey mixed-use condo/hotel/retail tower on the southwest corner of Yonge and Bloor streets, is approved at 308.6 metres tall, and should be Toronto’s and Canada’s first building to achieve supertall status… but Mizrahi Developments have applied for approval to extend the height of this Foster + Partners and Core Architects designed building to 338.3 metres. Even with it belonging on a Top Ten Under Construction list, that potential extension to 94 storeys makes The One the actual #1 on this list too, bumping all the proposals on the list down by one.

 

/by

Inflation forecast Canada 2021-2022

Inflation in the Canadian economy has been on a steep increase since the start of 2021. Now as Canada begins to emerge from the COVID-19 pandemic, the hopes are for positive economic growth, however, it seems pandemic effects may stick around longer than most anticipated.

Pressure is now being put on the Bank of Canada to rein in rising inflation. The bank has held its position that high inflation is merely a “transitory” issue, though some are warning inflation may get worse before it gets much better.

What is the current inflation rate?
According to new figures from the CPI released this week, the current inflation rate in Canada reached a new high of 4.7% in October, in line with market expectations. While not the highest level in history, it’s the highest inflation rate Canada has seen since 2003 and is more than double the average pre-pandemic levels of about 2%.

This is up from about 1% at the start of the year and 4.1% in August. The U.S. has seen a similar spike in inflation, hitting above 6%. Central banks across the world are also reporting large growth in inflation.

What is the Consumer Price Index (CPI)?
The consumer price index is a means for measuring price increases in Canada and is the primary indicator used to determine inflation rates.

The CPI tracks the prices of eight major commodities in order to determine how the economy is inflating or deflating. Though various commodities may fluctuate in price, the broad selection of goods represents an average of Canadians’ household spending.

Eight commodity prices tracked by the CPI

  • Food
  • Shelter
  • Household operations, furnishing, and equipment
  • Clothing and footwear
  • Transportation
  • Health and personal care
  • Recreation, education, and reading
  • Alcoholic beverages, tobacco products and recreational cannabis

Each of these commodities is weighted in terms of relative importance. The CPI measures costs and applies an index value, the rate at which the index changes is expressed as the inflation rate. Monthly increases are projected out to find a hypothetical yearly rate, however, the rate rarely stays the same for a whole year.

Canadian inflation history
The last time Canadian inflation ran wild was in the 1970s and 80s when inflation rose as high as 14%. At that time, inflation was caused by a perfect storm of global economic conditions and failed governmental economic stimulation. This period of inflation during a recessionary period was known as Stagflation. Eventually, inflation was brought under control due in part to increased interest rates, and it gradually reduced until hovering around 2% for many years.

At the start of the COVID-19 pandemic, inflation actually dipped low for a brief period. From about March to May 2020, the CPI saw very low or no increases as markets faltered in response to new restrictions. The price of gas along with rent prices decreased, and travel expenses fell sharply.

However, as it became clear that difficult times were here to stay for the near future, prices in food, gasoline, housing and more began to rise as the difficulties in production and supply chains increased. Since then inflation has continued to tick up steeply.

What inflation means for Canadians
There is some contention in the understanding of inflation and how it can affect Canadians. Some people actually see high inflation as possibly a good thing and a natural consequence of an unbalanced economy. They also point to positives such as the fact that inflated money makes paying off past debts even easier as the purchasing power of the dollar goes down.

On the other side of things are the arguments against inflation. These include the fact that as inflation goes up, uninvested savings actually decrease in value. This is of particular concern for the millions of Canadians approaching retirement age who are now seeing their funds dwindle.

There is also the fact that inflation is rising faster than wages. Prices are up all over and the labour force is starting to demand more compensation for their work, causing labour shortages in some areas. Overall, a less healthy and more unstable economy can lead to all sorts of turmoil both economically and socially.

What is the inflation forecast?
There is also much contention on how rising inflation will play out for Canada. Some forecast it as only a transitory adjustment that will subside, while others fear it’s a warning for things to come and a repeat of inflationary periods of the 1970s.

Recent inflation expectations predict that the CPI will rise above 5% by the end of the year, with multiple point increases still in the forecast in 2022. According to the Conference Board of Canada’s Index of Business Confidence, a majority of businesses polled feel inflation rates will rise 2% or more in the next six months. The central bank however hopes for average rates of 3.4 percent for 2022, up from a previous forecast of 2.4%. They aim to reach the target inflation rate of 2% by 2023.

What can the central bank of Canada do?
All eyes are now on the Bank of Canada as inflation rises. During the pandemic, the Bank of Canada cut their policy rate to record low levels in order to ensure the flow of money continued through the economy. They have committed to holding off until at least the second quarter of next year until they raise rates, and expect rising inflation to be a temporary issue.

Should they be wrong and inflation gets too out of control, they may be forced to announce an early interest rate hike, or a faster pace of increases, in order to combat inflation.

Bank ends Quantitative easing
Another means by which the bank has influenced the rate of inflation is through its quantitative easing program. Under this program, the bank bought up mass amounts of government bonds, causing their prices to surge and their yields to drop, thus lowering related rates such as fixed mortgage rates. Late last month, the bank opted to ease down this program, and many are saying this is a sign of increased interest rates to come.

/by

Toronto home prices up 33% and the real estate market isn’t cooling anytime soon

Toronto’s hot real estate market isn’t showing any signs of cooling and a new report explains why.

As we have seen from numerous real estate reports, home prices continue to skyrocket across Canada. Some believe Toronto’s bloated housing market is on the verge of popping, but not until mortgage rates increase and discourage future foreign real estate investments.

A new report shows that the city’s home prices continue to rise and why they aren’t dropping just yet.

“Those hoping for a slow-down in the Toronto area’s housing market will need to wait a bit longer — all indicators from the past month’s data for October 2021 are showing a market that is actually heating up rather than cooling down,” reads the latest Move Smartly report from John Pasalis, president of the real estate brokerage Realosophy Realty.

There are fewer homes on the market. At the end of October, the Toronto area had only 3,687 houses available for sale, a 56 per cent decline from inventory levels last year and well below the roughly 12,000 active house listings that are more typical for the month of October, the report notes.

“Toronto’s housing market continues to be a market where demand significantly exceeds the supply of homes coming on the market for sale,” Pasalis says.

But he argues the strong demand today is different from the housing demand last year at this time in the first year of the pandemic.

“This time last year, the strong demand was largely driven by a surge in home buyers entering the market,” he says in the report. “This year, the surge in demand is coming from investors rather than end users.”

In fact, house sales were down 18 per cent on a year-over-year basis in October, but still above pre-COVID 19 pandemic levels for October in 2018 and 2019.

The average price for a house in October was $1,445,088, up 28 per cent over last year; the median house price in October was $1,265,000, up 33 per cent over last year.

Condo prices are also on the rise.

The average price for a condo in October reached $730,726, up 15 per cent over last year; the median price for a condo in October was $660,000 up 15 per cent over last year.

 

So when will Toronto see a decrease in home prices?

While many people suggest that an increase in mortgage interest rates will lead to a price drop, Pasalis suggests this is unlikely in the short-term. Many homeowners have fixed, five-year mortgages so the change in rates won’t have an immediate impact.

So, if you are looking to buy a home, you may want to hold off a bit. Looking to sell? Don’t wait too long.

“If we see a lot of demand come out of the market and more homes listed for sale, our market will start to slow down, but will continue to remain in seller’s market territory, with prices growing at a more modest rate than we are seeing now,” the report states.

/by

GTA rental prices mark sixth straight month of growth from two-year low

Rental prices in the Greater Toronto Area continue to trend upwards from the market’s two-year low that was recorded in early 2021.

In its Toronto GTA Rent Report published this week, Bullpen Research & Consulting and TorontoRentals.com stated that rents increased in September for the sixth consecutive month, up from March’s low of $1,971.

From September to August, rents for all property types in the region jumped 0.9 per cent from $2,097 to $2,116. Average GTA rents are down ​​0.7 per cent yearly, but this marks a significant improvement compared to January 2021 when annual rents had dropped by over 17 per cent.

“The rental market in the GTA continues to slowly recover from the significant declines experienced during the pandemic, but average rent levels remain well below pre-COVID levels,” said Ben Myers, president of Bullpen Research & Consulting, in a press release accompanying the report.

“The fall market is typically one of the strongest periods for rent growth and leasing activity, and the condo rental market in Toronto is very hot, with average rent rising 19 per cent between February and September of this year,” he added.

Tenants will now have to pay approximately $80 and $120 more for a one- or two-bedroom rental in the GTA compared to early 2021.

For all property types, the price of a one-bedroom GTA rental cost $1,834 and $2,320 for a two-bedroom in September. Prices for both bedroom categories were down on an annual basis by 3.8 per cent and 2.2 per cent, respectively.

However, September rentals prices were up from the March’s market low when one- and two-bedroom rentals were going for $1,750 and $2,174, down 16.2 per cent and 16.3 per cent year-over-year at the time.

The report noted that condo apartments in the GTA experienced a “significant decline” in average rental rates during the pandemic, but have quickly recovered into September. Apartment property types, however, did not experience as drastic of a decline and instead slowly increased in price towards the end of the year.

“This is evident in the increasing difference in rental rates for condo apartments and rental apartments,” said the report.

In downtown Toronto, the average rent for a condo apartment grew 10 per cent annually to $2,446. Condo rentals in the GTA were also noted to increase in price, rising by eight per cent year-over-year in September to $2,373. For apartments located in Toronto and the GTA, September rental prices dropped by about three per cent from 2020.

Last month, Toronto posted the highest average rent per square foot (RPSF) at $3.34 for all property types. Compared to suburban communities, the RPSF in September averaged between $2.10 to $2.75 for Oakville, Mississauga, North York, Markham and Richmond Hill. Areas that are located closer to the periphery of the GTA — such as Caledon, Whitby, Brampton, Aurora, Pickering, Oshawa and Ajax — reported the lowest RPSF ranging from $1.50 to $2.00.

/by

What labour shortages, inflation and supply chain headaches mean for builders, buyers

The new construction industry continues to grapple with rising trade costs in tandem with soaring commodity prices and Toronto could see building expenses climb higher this year.

David Schoonjans, senior director of cost and project management at Altus Group, told Livabl that skilled labour shortages are an issue in many Canadian cities, which has been a long-term problem for the industry. Several trades have experienced significant cost increases in 2021, especially formwork, electrical and drywall services.

“Changes in the cost of a large trade will influence total building costs much more than a small trade,” said Schoonjans. “In terms of dollars, formwork is the largest trade for most high-rise residential buildings, and its costs have increased significantly in 2021. Thus, formwork continues to be [the] most significant factor in high-rise residential construction cost increases.”

The challenges caused by labour shortages are not exclusive to Canada. According to recent market insights from Ali Wolf, chief economist at Zonda, 84 per cent of builders in the United States are facing a severe labour shortage, nearly double the levels reported in January. Texas, one of the hardest-hit markets and the state that is leading construction starts, reports that 92 per cent of builders are seeing a lack of labour impacting closings.

But availability of labour is only part of the problem.

Schoonjans explained that much of the cost increases experienced this year have been driven by material shortages and “skyrocketing” commodity prices for components such as steel, lumber and copper.

“Most of these have increased both significantly and rapidly,” said Schoonjans. “In many cases the price of these commodities is now at or above historical levels, with most of the increase occurring in 2021.”

Schoonjans pointed out that there is “little consistency” in what materials are in short supply. For instance, one development project may experience a shortage of tile, while another might have issues sourcing HVAC equipment.

“Developers and contractors are playing the world’s biggest game of whack-a-mole; hammer one supply problem down and another one pops up,” said Schoonjans.

In an interview with Livabl earlier this year, Schoonjans said that high-rise multi-family projects in Toronto could see construction costs escalate into the seven to eight percent range in 2021. This was a jump up from the original predictions published in Altus Group’s 2021 construction cost forecast, initially estimated at five percent this year, and falling somewhere in the range of three to six percent.

Schoonjans provided another updated forecast to Livabl, predicting that construction costs for high-rise Toronto residential buildings “will have increased by 10 per cent to 11 per cent by the end of 2021.”

He also pointed out that if the market should reach a point where cost increases impact the financial viability of projects, then this could “easily slow the pace of completions.”

Wolf noted in an interview with Builder that 70 per cent of US builders are intentionally slowing down their sales to match their inventory with production capacity in light of lumber price volatility.

Ben Myers, president of Bullpen Research & Consulting, explained that increasing costs eat away at developer profits, impacting their monetary returns. In many instances, Myers said that developers can’t secure lender financing if they don’t have a 10 to 12 per cent return.

“It’s not like they can even build a project or even start a project without those types of numbers being projected,” he said. “It’s a huge issue and certainly impacting the revenue.”

Myers explained that if costs continue to go up at their current pace, then there is a risk for potential project cancellations, particularly for developers that don’t have units left over to sell to cover an increase in costs. Developers may also choose not to launch projects to avoid the additional risk in the marketplace or increase their prices.

“When you’re operating in an environment where you don’t have that certainty in terms of cost, then you have to increase your pricing,” said Myers. “You have to allow for that potential of the future. You have to cover yourself off in the revenue because you’re selling the building first and building it later. It really drives up the cost of new condos as well.”

Myers said that he doesn’t see any short-term solutions. For costs to go down, there has to be fewer projects on the market, and 2021 saw a booming first nine months following a good second-half in 2020, which means more future projects in the pipeline.

“So I don’t see any reprieve in terms of people planning projects, and sales in place for projects to move forward,” said Myers. “In terms of the demand for construction services, I think it’s still going to remain fairly high.”

/by