Posts

Federal government plans to bring in more than 1.2M immigrants in next 3 years

The Liberal government plans to bring in more than 1.2 million immigrants over the next three years, despite hurdles created by the global pandemic.

Immigration Minister Marco Mendicino unveiled what he called an “ambitious” three-year immigration plan today that set targets for bringing skilled workers, family members and refugees into Canada.

Canada aims to bring 401,000 new permanent residents in 2021, 411,000 in 2022 and 421,000 in 2023.

The numbers — which represent an increase of about 50,000 for each year — aim to compensate for the shortfall this year due to the pandemic and represent about one per cent of Canada’s population.

Last year’s plan promised to bring in more than one million immigrants over a three-year period, but the COVID-19 crisis and the resulting travel restrictions have slowed down the process. Mendicino said the government remains committed to welcoming newcomers as a means to keep Canada’s economy afloat.

At a news conference in Ottawa today, Mendicino said immigrants drive the population and economic growth that pays for vital programs such as health care.

“Put simply, we need more workers, and immigration is the way to get there,” he said.

WATCH: Immigration Minister Marco Mendicino on immigration targets:

 

Mendicino said he’s confident the government can meet the targets despite the global health crisis, by working around travel restrictions while adhering to safety measures such as mandatory quarantines.

He said the government will aim to attract workers to fill labour gaps in regions facing sector shortages.

“With nearly 60 per cent of all new admissions in the economic class, our plan will continue to focus on Canada’s economic growth,” he said.

The breakdown of next year’s plan includes:

  • 232,000 immigrants in the economic class.
  • 103,500 in the family class.
  • 59,500 refugees and protected persons.
  • 5,500 on humanitarian and compassionate grounds.

Traditionally, Ottawa’s goal in immigration policy has been to attract top talent in a competitive global market while reuniting families and offering refuge to people displaced by disaster, conflict and persecution.

In its last three-year plan, the federal government sought to bring in 341,000 immigrants this year, 351,000 next year and another 361,000 in 2022.

The government did not offer a precise figure on how many immigrants have arrived in Canada so far this year, but says it’s on track to meet half of its 341,000 target by year’s end.

Conservative immigration critic Raquel Dancho called the numbers “pure fantasy” and said the government has no plan to bring in large numbers of immigrants safely despite border restrictions and embassy and office closures around the world.

“There’s just no way that’s going to happen. And I was really hoping to hear an actual plan of how those issues were going to be resolved today. And there was not barely any mention of it at all,” she said.

She said rapid testing for COVID-19 would be a critical step in helping bring people in during the pandemic, but the government has failed to make the necessary progress.

She said the Trudeau government must offer a concrete plan for bringing people safely into the country during a pandemic and for integrating them into Canadian society.

“The number can be whatever it’s going to be, but unless they bring forward a plan for how they’re going to change course and get better at processing immigration applications, it’s really all for nothing.”

NDP MP Jenny Kwan said the government must take steps to accelerate processing after the pandemic slowed the process and created a growing backlog of applications.

“With over half a year of applications whose processing came to a complete stop, there will be no shortage of requests to be processed next year,” she said, adding that the immigration department must have a significant boost in resources to deal with the backlog.

“Without these investments, applicants are to expect significant increases in processing times for years to come, which were already long before the pandemic.”

She said Canada also should give permanent residence status to people who want it and are already in the country, such as temporary foreign workers and international students with job offers.

“Canada can, in fact, take a true humanitarian approach by regularizing all those immigrants and refugees and undocumented people,” she said.

Focus on labour gaps, says C of C
Leah Nord, senior director of workforce strategies and inclusive growth for the Canadian Chamber of Commerce, said the government must focus squarely on matching economic migrants to worker shortages in various sectors and regions of the country.

Despite changes in the labour market and a major spike in the unemployment rate since the onset of the pandemic, gaps in the market remain, Nord said — and immigration will continue to play a large role in filling persistent labour shortages.

“We’re in this rather strange situation where we do have higher unemployment rates than we’ve seen for a number of years. Before the crisis there were record low unemployment rates. Now, they’re tipping towards the other end,” she said.

“But we still have a situation where there are still job vacancies and jobs that need to be filled across the country. Immigration can play an important role in diversity and economic growth, but also in filling labour market gaps, for sure.”

The government’s Advisory Council on Economic Growth recommended that Canada boost its annual immigration levels to 450,000 by 2021 to stimulate the economy and tackle the twin labour market problems of an aging population and a low birth rate.

/by

Detached home prices rose over 20% in 14 Toronto suburbs in October

From Oakville and Milton in Halton Region to Oshawa and Clarington in Durham Region, there were 14 Toronto suburban cities and towns that saw detached home prices rise over 20 percent in October.

For the fourth consecutive month, the Toronto region’s housing market broke a sales record, again surging past 10,000 transactions for a 25 percent sales increase in October compared to the same month last year.

The Toronto Regional Real Estate Board (TRREB), which published the data yesterday, noted that sales in the detached home market segment drove the biggest gains, with new listings unable to keep pace with demand.

As buyer preferences have shifted to suburban detached homes, prices have been rising rapidly as suburban markets tighten up in the face of the demand influx. In just one example of how markets have quickly changed, detached home prices rose by more than 20 percent in 10 Toronto suburbs in September. Now, in October, there are 14 suburbs that saw home price growth surpass the 20 percent-mark.

Of the 30 suburban cities and towns tracked by TRREB, Adjala-Tosorontio in Simcoe County and Uxbridge in Durham Region saw by far the largest increases in detached home prices in October. Prices in Adjala-Tosorontio rose nearly 60 percent to $1,039,993 while Uxbridge recorded a close to 52 percent increase to $1,249,676.

Six more areas saw detached home prices rise over 25 percent. They were Scugog, Caledon, Clarington, Halton Hills, New Tecumseth and East Gwillimbury.

Rounding out the 14, another six markets saw prices rise between 20 percent and 25 percent. They were Oakville, Oshawa, Vaughan, Newmarket, Milton and Pickering.

Ten of those 14 markets recorded average sold prices above $1 million. In October 2019, only three of those same markets had average sold prices over the million dollar mark.

TRREB Chief Market Analyst Jason Mercer said earlier this week that the board expects near-record home sales figures for the remainder of 2020 with pent-up demand from the spring still buoying market activity. With buyers still scooping up detached homes at a rapid pace, expect prices to keep accelerating too.

/by

Toronto condo completions rose 124% this summer, construction activity remains near record high

Construction crews were busy completing work on 6,816 condo units across the Toronto region this summer.

The third quarter total represented a huge leap over last year, rising 124 percent above the 3,038 units completed in 2019’s third quarter, according to new data from research firm Urbanation.

The surge in condo completions over the summer pushed the total completed through the first nine months of this year to 17,596 units, 47 percent higher than through the same period in 2019.

What’s most impressive, according to Urbanation, is despite this substantial rise in completions, there are still 78,156 units under construction in the Toronto region. The firm said that it expects 5,411 units to be completed in the final quarter of the year, bringing the annual total to a record-breaking 23,007 units.

A similar completion total is expected for 2021, with 70 percent of completed units located in Toronto-proper.

The city’s pipeline of new construction condos has been burgeoning for several consecutive quarters now, but the record-breaking completion numbers are somewhat ill-timed from a demand perspective.

Condo resale listings have risen considerably through the summer and fall while the city’s rental market is also seeing a sharp increase in units listed, forcing investor-owners to slash prices in order to woo renters.

In the same report, Urbanation said that new condo sales remained strong in the third quarter, but sales levels diverged when the suburban 905 area surrounding the city and the Toronto-proper 416 area were compared. New condo sales rose 106 percent in the 905 in the third quarter, while the 416 saw sales decline by 16 percent.

/by

Seven Ways COVID-19 Is Affecting Canadian Housing: RBC Report

Among the seismic shifts the pandemic has spurred across the Canadian economy, few are as profound as those that have rocked Canadian real estate. The battle to control the spread of COVID-19 has not only altered how and where Canadians work, but also led many to question where and how they want to live. Rural and suburban areas that once lagged desirable city addresses are now roaring hot as homebuyers wearied by lockdowns seek bigger yards and larger living spaces. Tight downtown condo markets that previously commanded expensive rents are now thick with supply. And the flow of immigrants that typically fuel demand for housing of all types has slowed to a trickle. In just months, the landscape of Canadian real estate has been shaken to its core. Whether the changes are permanent or transitory is an open question, but one thing is certain, 2020 has been a year like no other for Canadian housing markets. Here we look at seven ways COVID-19 has affected housing.

Peak home resale activity shifted from spring to summer

Lockdown orders sent a shock through the housing market in March, suspending open houses and flat-lining sales during what is typically a high season for the market. Spring activity wasn’t lost though. As social distancing restrictions were relaxed in the summer, the market sprang back to life. This led to record-high activity over the July-September period. Pent-up demand was largely exhausted by September and we expect a return to more normal levels later this fall.

Rental markets cooled in some of Canada’s largest and least affordable cities

Following years of steady increases, rent is now declining in Toronto, Montreal and Vancouver, especially in higher density, downtown locations. Underlying the shift: is a surge in rental supply as the short-term rental business dries up and new purpose-built rental and condo units are completed. It all comes at a time when many renters have come under heavy financial pressure. Renters tend to earn less than homeowners, and it’s been lower-income and younger Canadians who suffered the most job losses during the pandemic. Demand near post-secondary institutions has softened too, due to the switch to online study and the closing of our border that kept many foreign students abroad.

Condo investors are looking to sell

As rents soften and vacancies rise, condo listings are spiking in Toronto, Montreal and Vancouver—albeit from low levels. New, stricter regulations in Toronto are adding to the impulse to sell – at a time when new condo completions are bringing more units to the Toronto and Vancouver.

City-dwellers are pulling up stakes on a quest for larger living spaces—often in cottage country

Big-city living has lost some of its luster with social distancing measures severely restricting cultural life and socializing opportunities. Working and studying from home is now a reality for many, further eroding the attachment to big cities. Meantime, affordability issues are driving many Canadians further afield into smaller towns and cottage country, where larger living spaces are available. Clearly COVID-19 has lit a fire under cottage country real estate.

A silver lining? The pandemic made it ‘more affordable’ to own a home

With the Bank of Canada’s overnight rate cut to close to zero and sharp declines in bond yields mortgage rates have been pushed to their lowest levels on record. This slightly reduced mortgage payments on a home priced at market value despite prices continuing to rise at an accelerating pace in most of Canada. Generous government income support programs for households most affected by COVID-19 also made it easier to carry mortgage payments. Overall, Canadian households received more money ($56 billion) from government aid programs such as CERB and other transfers in the second quarter than they lost in wages and salaries due to the pandemic ($23 billion). On net, household disposable income spiked 11% in Canada. This substantially increased buyers’ purchasing power.

A key pillar of Canadian housing demand has been shaken: immigration

COVID-19 has severely disrupted the flow of immigrants moving to Canada—a major source of housing demand. In the second quarter of 2020, the number of new permanent residents plummeted 64% and more non-permanent residents left our country than came to it. The impact was dramatic: total net migration collapsed 94%. With the border poised to remain closed to all but essential travelers, and most post-secondary students continuing to study at home until immunization from COVID-19 reaches high levels in Canada and abroad – immigration is unlikely to rebound soon. To date, weak in-migration has had minimal impact on Canada’s overall housing market. But if sustained, we expect it will temper rental demand in larger markets as immigrants tend to rent in their first 5-10 years after landing into our country. This could have negative repercussions for condos and longer term, an extended period of weak in-migration could deplete future cohorts of first-time homebuyers.

The pandemic put many homeowners on the defensive

The sheer economic shock of COVID-19—with unemployment soaring to unprecedented highs—directly impacted many Canadians and put many others on the defensive. Almost 780,000 people opted to defer mortgage payments since the start of the pandemic, representing 16% of mortgages in bank portfolios. By the end of August, the vast majority of mortgage holders whose deferral period has expired had resumed regular payments. However, it remains unclear how many will ultimately be able to continue as outlook for jobs remains bleak for many Canadians. This poses a risk for the housing market, especially in areas where the economy is shakiest. Financial strains could potentially unleash a wave of properties for sale.

Robert Hogue is a member of the Macroeconomic and Regional Analysis Group, with RBC Economics. He is responsible for providing analysis and forecasts for the Canadian housing market and for the provincial economies. His publications include Housing Trends and Affordability, Provincial Outlook and provincial budget commentaries.

Disclaimer (RBC)

/by
,

Canada’s housing market has fully recovered from pandemic shock: RBC

Even the most bullish housing observers would have had a tough time anticipating just how quickly Canada would bounce back from the pandemic shock that froze up market activity in the late winter and spring.

But, after what RBC Senior Economist Robert Hogue calls a “spectacular rally,” the market has fully recovered and then some. National home sales hit an all-time high for September, climbing over August and up 46 percent over 2019’s total for the same month.

What comes next, however, is still shrouded in uncertainty.

In commentary published earlier this month, Hogue said that while the summer housing rally had been extended into September, the market has likely expended all the pent-up demand that had accumulated from earlier in the year at the height of the pandemic shutdowns.

The economist wrote that the market is set to cool off without the pent-up demand to keep it aloft. Tight supply relative to current demand for housing will also have an impact on sales numbers through the fall.

In what will be long remembered as a bizarre year for Canada’s housing market, it’s far from unusual for home sales to slow as the year winds down. But Hogue believes the next few months should at least offer some clues as to where the market is heading in 2021.

“We’ll see whether low interest rates and changing housing needs can keep demand boiling hot, or whether the exhaustion of pent-up demand and plummeting immigration will cool things down,” Hogue wrote.

“We’ll also learn how many current homeowners will be in trouble once mortgage payment deferrals expire and are forced to sell,” he added.

RBC has maintained a relatively positive outlook on the country’s housing market through the pandemic. Hogue said that answers to these questions, as well as a better view into how the second wave of COVID-19 plays out, should provide a better understanding of the risks as we move into the second calendar year of a pandemic-affected housing market.

/by

Canadian home sales up nearly 46%, shattering September record

It was another record-breaking month for the Canadian housing market. September sales rose 45.6 percent over the previous year with no obvious signs of slowing after several months of remarkable levels of buyer activity.

Sales rose in almost all Canadian housing markets in September, amounting to a nationwide total high that was enough to beat the previous record for the month by a margin of 20,000 transactions, according to data published today by the Canadian Real Estate Association (CREA).

September records were broken on the pricing side as well, with the national average sale price increasing by 17.5 percent over the previous year to $604,000. This marked the first time that the national average exceeded $600,000. CREA noted that the soaring average sale price is heavily influenced by robust activity in the country’s two most expensive markets — Toronto and Vancouver.

CREA Senior Economist Shaun Cathcart wrote that the usual suspects were driving the record-breaking levels of activity in the country’s housing markets, with pent-up demand, government income support, rock bottom low interest rates and job losses being concentrated on lower wage workers all cited.

“But I think another wildcard factor to consider, which has no historical precedent, is the value of one’s home during this time. Home has been our workplace, our kids’ schools, the gym, the park and more. Personal space is more important than ever,” Cathcart said in a media release.

Commenting on yet another release of record-breaking housing market data, TD Economist Rishi Sondhi noted that increases in the supply of homes for sale and a pandemic-driven slowdown in population growth that was less severe than anticipated likely played a role.

“Also, instead of travelling during the traditional July and August vacation periods, people stayed home on account of the pandemic. This gave them more opportunities for buying and selling, which they likely took advantage of,” Sondhi wrote.

The past three months have been a remarkable show of strength during an economically tumultuous period, but many market experts believe that this pace cannot be sustained over the long term.

BMO Senior Economist Robert Kavcic wrote in response to the CREA data that while the bank doesn’t “subscribe to the deeply bearish view on Canada’s housing market,” there are enough headwinds building that the market should cool down in the months ahead.

/by

Wuhan, Former Pandemic Center, Emerges as Tourist Hot Spot

Wuhan, the city at the center of the coronavirus pandemic, had the most tourists of any Chinese city during a public holiday in October. Wuhan is overcoming its pandemic past and benefiting from its hero-city status to become a top travel destination

 

 

/by

From Downtown to ‘Urban Centre’, Why Mississauga Could Be the Move to Make

Buyers flocking to the 905 also want an urban experience, making condos in the growing urban centre of Mississauga the perfect choice.

Mississauga real estate is on a tear, reflecting the considerable efforts the city has put into its livability factor, transforming it from commuter suburb to urban centre, without the stress of downtown Toronto living.

Of course, prices are rising in tandem with popularity, so many who want a less frenetic lifestyle outside of downtown Toronto are considering a condo in this neighbouring city.

The Great Migration

There has been a steady stream of people moving to the 905-region as of late. Figures from the Toronto Regional Real Estate Board (TRREB) in August showed the region outperformed the 416-area in both sales and the number of new listings.

Summer activity was explained, by many in the industry, as pent-up demand being released, as those who sat on the sidelines in the spring due to the pandemic went on a buying spree. But September figures kept the trend going, with the number of sales across all housing categories up by 42.3% in the GTA from the same time last year. And the 905 continued to outperform the 416 in September.

Affordability is one of the key factors driving buyers into the 905 area. The average price for all housing types in the 905 is $931,834, according to the latest TRREB figures. For the 416, the average price was $1,022,051. There is also more choice for buyers: there were 11,731 new listings of all housing types in the 905 in September, compared with 8,689 in the 416.

In the sales figures especially, it’s clear that buyers are voting with their feet (or moving vans). There were 7,528 sales of all housing types in the 905 in September, versus some 3,555 in the 416.

Urban Living Outside Toronto

While the 905 area encompasses a wide region, for those who want a more urban experience with close proximity to Toronto, Mississauga is a particularly coveted location.

The city’s Downtown Strategy aims for a growing, walkable downtown, where people can live, work and play.

“One of things we find … is that people moving to Mississauga want to be in the suburb but also want access to Toronto,” says Asha Singh, president of the Mississauga Real Estate Board (MREB). There are also the people who want to “feel like they are living in a city.”

Mississauga is a diverse cultural community, Singh says, with city-sponsored cultural events, many restaurants, and live-performance venues (the latter of which are waiting patiently for those days to return).

For those who enjoy the outdoors, Mississauga is filled with green space, Singh says, and for cyclists, there are “more than 400 km of on-road bike lanes.” There are golf courses and parks along the Credit River where people can actually see salmon run, she adds.

Though there is quick access to major highways such as the 401 and the 403, transit is also well served with the GO train, Miway buses, and the Light Rapid Transit line still being built out. For families, there are many excellent schools, libraries and play fields, she says. With Sheridan College and the University of Toronto’s Mississauga Campus, higher education is also accessible throughout the community.

With denser, mixed-use planning, as well as an emphasis on public transit, Mississauga is growing into an urban landscape.

Condo Life and the Perla Project

While the migration to the 905 region encompasses buyers looking for all housing types, condos remain the most affordable option when it comes to enjoying urban living. They also offer several advantages: maintenance is taken care of and buildings offer many amenities, for instance.

But size is often an issue, especially now, when space to work from home is an important consideration. Some of the condos in downtown Toronto could only be called “tiny,” coming in at under 500 square feet. In other words, not exactly the size you need to live (and love) your new COVID life that includes working at least some, if not all, your days from home.

Though the shift in demand for real estate in the 905 region started before the pandemic, according to Ryerson University’s Centre for Urban Research and Land Development, more people took a hard look at how much space they needed while spending more time at home.

“With COVID, people want to be in the suburbs, where they can get in the car or go for a walk,” says Singh.

Perla, a new development at Eglinton Avenue East and Hurontario Street, is offering the best of all worlds: urban, approachable condo living, but in much larger than average units that include massive balconies so working from, and enjoying time in, one’s space is easily attainable.

The Pinnacle International project offers 2- and 3-bedroom units from 960 square feet to more than 2,000 square feet. That’s a lot of living space. The development also includes extensive amenities, such as a 24-hour concierge, an indoor swimming pool and hot tub, fully-equipped exercise and yoga rooms, and a party room with kitchenette for better times to come.

While the East Tower is still under construction, occupancies in the West Tower are well under way, with all units including one parking spot and one locker. And with pricing in Mississauga more affordable than in Toronto, condos in the 905 are moving fast, Singh says. “As soon as they come on, they are bought.”

Perla is set in 15-acres of parkland, is just steps to the future LRT, and brings with it the amenities of an urban centre while still being set in the suburban calm of the red-hot 905-region.

To learn more about Perla and how you can register click here.

/by

Bank of Canada plans to keep interest rate near zero until 2023

Bank is assuming no widespread lockdowns are coming back, and that there will be a vaccine by 2022

The Bank of Canada says it has no plans to change its benchmark interest rate until inflation gets back to two per cent and stays there, something it says isn’t likely to happen until 2023.

The central bank said Wednesday it has decided to keep its benchmark interest rate steady at 0.25 per cent. The news was expected by economists, as although the economy is showing signs of recovering from the impact of COVID-19, things are still a long way from normal, so cheap lending will be needed for a long while yet.

The bank outlined a fairly bleak assessment of the worst case scenario when it laid out its last Monetary Report in July. But the roughly eight months since COVID-19 began in Canada have given the bank a clearer picture of how things are shaking out, even if the picture isn’t always rosy.

“With more than six months since the onset of the pandemic, the Bank has gained a better understanding of how containment measures and support programs affect the Canadian and global economies,” the bank said.

“This, along with more information on medical developments related to COVID-19, allows the bank to now make a reasonable set of assumptions to underpin a base-case forecast.”

Rocked by COVID-19, the central bank says it expects Canada’s economy will shrink by 5.7 per cent this year, but grow by 4.2 per cent next year, and 3.7 per cent in 2022. Inflation, meanwhile, is expected to be 0.6 per cent this year,
1.0 per cent next year, and 1.7 per cent in 2022.

 

Those growth and inflation projections, however, are based on two leaps of faith: that there won’t be a second — or third — widespread lockdown in Canada, and that a vaccine or some sort of effective treatment will be widely available by the middle of 2022 at the latest.

“The breadth and intensity of re-imposed containment measures, including impacts on schools and the availability of child care, could lead to setbacks,” the bank said in the quarterly Monetary Policy Report that accompanied the rate decision.

Impact on mortgages

The bank’s outlook and rate decisions have real world impact on Canadian borrowers and savers. Fixed-rate mortgages are priced based on what’s happening in the bond market, but the central bank’s rate has a direct impact on variable rate mortgages.

So telegraphing that rates are going to stay low for long presents something of a conundrums for borrowers, says James Laird, Co-founder of Ratehub.ca and president of mortgage brokerage CanWise Financial.

“There is no wrong answer right now,” Laird said.

“Canadians who derive value from certainty should choose a fixed rate. For Canadians who are open to a little more risk, considering a variable rate is certainly appropriate, since the Bank is committed to keeping rates where they are for at least another two years.”

Economist Sri Thanabalasingam with TD Bank says the bank made it clear on Wednesday that the road to a full recovery will be slow.

“There’s a long way to go for the Canadian economy to emerge out of this crisis, ” Thanabalasingam said.

“The path forward is filled with uncertainty, most of which could set the recovery back a step or two, [so] the bank is set to continue to provide monetary support for many years to come.”

 

Source: CBC News
/by

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.

/by

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.

/by

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.

/by

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.

/by

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
/by

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.

/by

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.

/by

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.

/by

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.

/by

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.

/by

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.

/by