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Realtors expect market rebound post-COVID-19 – report

While the COVID-19 outbreak is expected to slow spring homebuying activity, many real estate professionals are hopeful that the market will rebound later in the year.

The majority of respondents to a survey by the National Association of Realtors said they believed that buyers and sellers would return to the market as delayed transactions after the outbreak ends. Fifty-nine percent said that buyers are delaying home purchases for a couple of months, while 57% said that sellers were delaying sales for a couple of months.

“Home sales will decline this spring season because of unique economic and social consequences resulting from the coronavirus outbreak, but much of the activity looks to reappear later in the year,” said Lawrence Yun, NAR chief economist. “Home prices will remain stable because of a pandemic-induced reduction in inventory coupled with less immediate concerns over foreclosures.”

Other findings of the NAR survey include:

  • 90% of respondents said that buyer interest declined due to the outbreak, and 80% cited a decline in the number of homes on the market
  • Home prices are expected to hold steady after a robust rise prior to the pandemic. Seventy-two percent of respondents said that sellers have not reduced their process to attract buyers. However, 63% said buyers were expecting prices to decline due to less competition in the current environment
  • While residential tenants are struggling to pay rent, 46% of property managers reported being able to accommodate tenants who couldn’t pay, and 27% of individual landlords said the same
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Goldman Sachs says advanced economies will shrink by 35% in the 2nd quarter — quadruple its financial-crisis record

  • Goldman Sachs’ chief economist predicted that advanced economies would shrink by about 35% in the second quarter of 2020 compared with the first three months.
  • The economist, Jan Hatzius, praised global policymakers’ responses meant to keep households and businesses afloat but said that Europe should do more and that wealthy countries needed to help developing economies.
  • “Emerging economies will need a lot more help from the rich world,” Hatzius wrote in a note to clients on Monday.

Gross domestic product for advanced economies will shrink by about 35% in the second quarter of 2020 from the prior three months, Goldman Sachs predicted in a note on Monday.
The forecast contraction would be four times the record set in 2008 during the financial crisis, according to annualized figures from Goldman Sachs.
Though most job losses are expected to be temporary and unemployment benefits have been raised sharply, the separation of workers from their jobs is “dramatic,” the bank’s New York-based chief economist, Jan Hatzius, wrote in a note to clients.

While the number of new active coronavirus cases appears to be peaking across the globe, experts have urged caution in reopening economies.

The improvement is “probably a direct consequence of social distancing and the plunge in economic activity, and could reverse quickly if people just went back to work,” Hatzius wrote.
Hatzius complimented global policymakers’ responses to try to replace people’s incomes and counter threats to the flow of credit but said efforts in Europe should be scaled up with a “whatever it takes” commitment.
To get through the severe crisis, “emerging economies will need a lot more help from the rich world,” he said, highlighting measures such as bilateral loans, financing from the International Monetary Fund and the World Bank, and outright aid.

As of Tuesday, global reported coronavirus cases had reached about 2 million, with more than 100,000 deaths.
Last week, the IMF raised its emergency lending facilities after more than 90 countries requested aid.

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TRREB Releases March Report on GTA Housing Market Amid Crisis

The March, 2020 monthly report from the Toronto Regional Real Estate Board (TRREB) shows continued strength in the Greater Toronto Area (GTA) housing market, along with the initial signs of turbulence due to the COVID-19 pandemic and associated economic challenges.

A total of 8,012 home sales were recorded in the GTA in March, 2020, increasing 12.3% over the 7,132 sales reported in March, 2019. Due to the circumstances, this number better reflects sales trends when broken down into pre- and post-COVID-19 periods. The first two weeks of the month, when businesses remained open, saw 4,643 sales. This accounts for 58% of the month’s transactions, and marks a 49% jump over the same two-week period last year. There were declines in the second half of the month though, with 3,369 sales representing a 15.9% drop versus last year.

“The overall sales result for March was strong relative to last year, but the impact of COVID-19 was certainly evident in the number of sales reported in the second half of March. Uncertainty surrounding the outbreak’s impact on the broader economy and the onset of the necessary social distancing measures resulted in the decline in sales since March 15. Sales figures for April will give us a better sense as to the trajectory of the market while all levels of government take the required action to contain the spread of COVID-19,” reads a statement from TRREB President Michael Collins.

New listings increased overall year-over-year in March, rising 3% to 14,424. Like the number of the sales, this figure paints a different picture when the month is broken into halves, with new listings dropping 18.4% year-over-year in the second half of the month.

“Despite sales and listings trending lower in the second half of March, demand for ownership housing remained strong enough relative to listings to see the average selling price remain above last year’s levels, including during the last few days of the month. As we move through April, we will have a clearer view on how social distancing measures and broader economic conditions will influence sales and ultimately the pace of price growth,” reads a statement from Jason Mercer, TRREB’s Chief Market Analyst.

The average selling price for March, 2020 managed to increase 14.5% year-over-year to $902,680 for the entire month. Like other statistics, the month broken in half reveals an average selling price of $862,563 for the last two weeks of March, though still up 10.5% year-over-year.

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Toronto realtors are selling through the pandemic

Two months ago, Toronto real estate agents and mortgage brokers were expecting a red-hot market, predicting that home sales and prices would surge back to 2017 heights.

Then the COVID-19 pandemic hit, leading to closures, layoffs and an economic downturn – and making two months feel more like two years ago.

“It’s like throwing sand on the fire,” says Meray Mansour, a Toronto-based realtor with Re/Max Hallmark Realty. Mansour spoke to NOW about the uncertain real estate market ahead alongside Odeen Eccleston, a broker with WE Realty and expert on HGTV Canada’s Hot Market, and Stephen Parks, a mortgage broker with RedPath Financial.

All three agree that the Toronto housing market is at a precipice. The gravity of the COVID-19 pandemic is sinking in as new measures are introduced and insecurity is taking hold among buyers, sellers and the industry as a whole. Realtors are bracing for a worst-case scenario while hoping for the best.

“We just don’t know,” says Mansour. “This is not something we’ve experienced in our lifetime.”

“My default ratio over my career is next to nothing,” says Parks about the mortgages he gets approved. “All bets are off now.”

Banks are allowing some clients to defer mortgage payments so that they don’t default. Even new mortgage deals are going through despite the minor hardships and temporary layoffs borrowers might be facing during COVID-19. But that’s only if the borrowers bouncing back seems likely.

Small business owners who rely on summertime business or perhaps run a travel agency won’t be so lucky, says Parks. And depending on how long the quarantine lasts, more and more people will have to figure out how they’re going to afford their homes.

“Most people don’t have six months saved up,” Parks adds. “We’re not talking about a rainy day here. You can dip into your piggy bank for your rainy day money. We’re talking about a while.”

This could all lead to more houses being listed, while buyers wither away because they also feel insecure about their finances.

“Now you’ve got more supply and less demand,” says Mansour. “That’s where the prices will go down more.”

Our experts point out that, up until this point, the market has yet to suffer consequences such as price drops and stagnant properties from the pandemic. While sales began slowing mid-March, Toronto home prices have been largely unaffected.

According to the Toronto Regional Real Estate Board, an early surge in March gave the GTA 8,012 real estate transactions, a 12.3 per cent boost over the same period in 2019. The average selling price is also up 14.5 per cent from the previous year at $902,680. Eccleston points out that while these figures are an improvement from last year’s low point, they are certainly not what realtors expected in 2020.

“You would think they’re taking a huge heater,” says Parks. “They’re not. I’m seeing prices in certain areas are still really strong. Roncy and the Junction area are still crazy.”

“I sold a property probably about $30,000 less than what I would have sold it for at the time we last spoke [in February],” says Mansour. “In the grand scheme of things, it’s not a huge difference but it is a difference. And [the pricing] also depends on location. I work in predominantly urban neighbourhoods. They tend to keep their value. There’s not as much land and inventory.”

“It’s not like people will get insane deals,” Eccleston adds. “That’s not happening just yet. Things are on pause. A couple of my sellers are nervous that things are going to get worse, so they’re taking what they can get. But it’s still by no means an incredible discount. As opposed to 20 offers, it might be two offers, which is a little bit more of a healthy market – a more levelled market.

“But I can see it getting worse before it gets back to normal.”

Mortgage rates are immune
Parks illustrates how sometimes great volatility just ends up keeping things static – just look at the mortgage rate.

“We’ve seen the Bank of Canada move the prime rate down three times,” says Parks, who points that two rate reductions were unscheduled and reactionary announcements, which is unprecedented. After the prime rate dropped to the current 2.45, somehow new mortgage rates went up.

“People are thinking, ‘You know what? Maybe I’ll take $10,000 and put it underneath my pillow just in case,’” says Parks, when asked about how we got to the new rate hike. “People are taking money out of the banks. The bank has less money to lend. Cost of funds at the banks are going up.”

The banks have switched things up. Instead of offering their mortgages at a discount like prime minus 0.75 per cent, they’re offering rates like prime plus 0.10 per cent, with rates hovering higher than when we started battling COVID-19. But the rate remains appealing enough to keep buyers house shopping during the pandemic.

“The good thing is interest rates are still low and there’s really no inventory,” says Mansour. “The [properties] that do come up tend to go quickly. There’s still more demand than supply.”

The new market
COVID-19 has created challenges in real estate at pretty much every stage. As of April 3, new constructions have been halted in Ontario while ongoing projects can continue with proper protocols in place. Eccleston has a new build in development, but has to wait on trades that are not running at full capacity – securing a trusted electrician during these times is not easy.

“Where we typically would have a few trades in the home at once, right now it’s a maximum of five people in the home, which would allow for one crew. Everything is a lot slower on the construction side, and that’s fine because safety is our priority.”

When it comes to selling houses, the agents must combine their talents with contracts, hospitality and sanitation.

“Open houses are over,” says Eccleston, who adds the most drastic change the market has seen so far is the process in which houses are sold: virtual tours and then appointments for serious buyers.

“We have people signing waivers to ensure they haven’t been travelling in the past little while, and that they haven’t been exposed to anybody with the virus as far as they know,” says Eccleston.

“Anybody who steps foot into any of my listings has to sign this disclaimer to look at houses safely: with masks and gloves on. Hand sanitizer is at every corner of each of my listings. Of course, there’s no crowding whatsoever. Two people max at a time. We have to take pretty extreme measures to make sure everybody stays safe and healthy but the homes are still getting exposure.”

If a buyer is interested in a home, Parks points out that they now have to deal with lenders who are working from home, lawyers that want to meet via Zoom and appraisers who can’t inspect a property. Parks explains that banks and other agencies are making concessions to get things done like virtual sign-offs and drive-by appraisals.

These protocols and concessions are in place for a shrinking market. All three experts agree that the people who are still buying or listing are doing it because they have to, whether they already sold their own property and need a new one or they already bought a property and need to unload their old one.

Eccleston has clients who bought a pre-construction home that is on schedule to close this summer, meaning they have to sell their current home at a less than ideal time. She also has a client who just purchased a bungalow in Uxbridge as a retirement home. That client is going to hold on to her old home until the time is right to sell. She may convert it into a rental property while carrying two mortgages.

“If somebody’s on the fence about whether or not they should be selling right now, don’t do a panic sale,” says Eccleston. “Let’s just adhere to all the mandated quarantine rules and regulations by staying home. Let’s wait it out and then we’ll sell when there’s a little bit more clarity in terms of what’s happening with the economy at large.”

“I had a few clients that were ready to go, but shit hit the fan,” says Mansour. She is now advising clients who were ready to list their homes in the spring offloading season on how to improve property value while waiting for a better moment. “Instead of just sitting there stagnant, I’m giving them tasks to do with their home. You could learn a lot from YouTube, even if you’re not a handy person.”

“The unknown right now is what’s scary,” Mansour adds. “You don’t know how long it’s going to last. You don’t know if it’s going to get worse here. There’s so many different things that we’re watching and hearing and you don’t know what to focus on. The general consensus is fear. When people are acting from fear, they’re a little bit debilitated. So it’s a bit of a stall right now.”

“I personally believe that everything is on pause,” adds Eccleston. “If we adhere to the rules, hopefully this whole thing will be rectified as soon as possible. And we can then hopefully resume business as usual. That’s only going to happen if we flatten the curve.”

“Let’s just get this over with so we can have a fighting chance at a summer.”

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Your Weekly Toronto Real Estate Snapshot: April 2020

Health and economic measures to slow the spread of COVID-19 are in full-effect across the province, and the repercussions on the real estate market in the GTA and the City of Toronto are clearly visible. The issue of a low supply of real estate listings in Toronto is exacerbated as a result of these measures, resulting in a marked decline in sales activity across the region at a time when the spring market would otherwise be in full swing. Between April 1-7, the number of homes sold and entered in the TRREB MLS system for each of the major property types (detached and semi-detached houses, and condo apartments and condo townhouses) in the GTA plunged over 65% year-over-year (y-o-y), and over 70% y-o-y in the City of Toronto.

The impact was most pronounced in the condo market segment, particularly for condo apartments. Based on transactions sold and entered for April 1-7, condo apartments slowed by 75% y-o-y in the GTA with 74 transactions and 74% y-o-y in the City of Toronto with 50 transactions. There was a considerable shift looking back to even one week ago, with condo apartment sales down 37% in the GTA and 32% in the City of Toronto. Condo townhouses followed a similar trend; there were 29 sales in the GTA this past week representing a 66% y-o-y decline and a 42% drop week-over-week (w-o-w). In the City of Toronto, just 9 condo townhouses sold, marking a 40% decline w-o-w and a staggering 72% annual decrease.

In the freehold segment, 166 detached houses were sold and entered in MLS for the GTA between April 1-7, marking a 25% decline since the week prior and a 70% y-o-y drop. Semi-detached homes in the GTA saw a 67% y-o-y decline and a more modest 9% w-o-w drop in sales with 42 transactions. A total of 44 detached homes changed hands in the City of Toronto, reflecting a 21% dip w-o-w and a 71% annual decline. There was also a 71% y-o-y decrease in semi-detached home sales in Toronto, with 13 transactions taking place over the past week.

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Diane Francis: Canada’s doing better than most countries in coping with the coronavirus

In a bleak world, Canadians are luckier than most, according to a snapshot of global statistics released this week by the website Worldometer. The stats show that, so far, Canada has fared comparatively well throughout this pandemic, thanks to the fact that the country is organized, its people are disciplined and its health-care system is among the best in the world.

As a result, Canada’s coronavirus fatalities are comparatively minimal, as of April 8, but still total a tragic 12 deaths per million. (What is curious is that Quebec’s fatalities are much higher — 20 deaths per million).

That aside, many other countries are faring far worse, according to daily statistics. Canada’s 12 deaths per million compares to Germany’s 28 deaths per million, America’s 45, Sweden’s 79, the United Kingdom’s 105, France’s 167, Italy’s 292 and Spain’s 326. The lowest rates — among developed nations whose figures can be trusted — is South Korea, with four deaths per million, and Australia, with only two.

These figures are not static and will increase daily until a vaccine is found, which is most likely at least 12 months away. The good news is that there appears to be 20 or so promising compounds and experiments underway that are repurposing existing drugs that have been found to be effective at fighting other diseases. This may speed up the discovery of an effective treatment.

But healing the economy is another issue and the good news is that ubiquitous testing can get people back to work sooner rather than later. But tests are the key.

Germany is the leader and is already administering 50,000 tests daily (in comparison, the best Canadian province is Alberta, which, at its peak, was administering 4,000 tests per day, and has plans to expand testing). Globally, South Korea is the best in class and has flattened the viral curve dramatically through testing, quarantining and re-testing.

Companies and countries are now racing to produce millions of test kits that are capable of accurately and quickly diagnosing the disease.

Right now, tests are needed to protect front-line workers and the elderly, but also, on a random basis, to identify individuals, buildings or neighbourhoods that are hot spots. Eventually, testing must become mandatory, and those who are infected should be relocated to empty hotels or dormitories under medical supervision, because, as we’ve seen in Italy and elsewhere, allowing infected people to remain in their homes allows the disease to spread through families and neighbourhoods.

Testing must also be accompanied by a strict system of identification, online or otherwise. This is necessary in order to get the economy working again. Under such a system, people who don’t have the disease would be entitled to return to work, reopen their businesses, ride the bus, babysit, volunteer, teach and attend school, gather at restaurants and parks, etc. This will breathe life into an economy that currently has hardly any pulse.

Concerns that this disease can be incubated for some time means that re-testing must also be part of the process. To undertake this, many countries have established thousands of test sites outdoors behind folding screens, or in parking lots or drug stores. The good news is that the vast majority of those who test positive recover without hospitalization.

Alberta has administered more tests per capita than most countries, and has focused initially on those with symptoms, the elderly and front-line workers.

Another positive development is that there are many testing devices being created or produced. One American pharmaceutical giant is shipping a portable rapid-testing device that diagnoses people within five minutes.

But the silver lining in this cloud is that tens of millions of physicians, scientists and technologists from around the world are racing to find vaccines and treatments. They are conducting tens of thousands of experiments and sharing information unlike ever before, and governments have expedited clinical trial approvals. This means a game-changer or two will surface sooner rather than later.

In the meantime, Canada, with its disciplined populace, supportive governments and excellent centralized health-care systems remains one of the best in class in coping with the coronavirus so far.

Financial Post

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“We saw a major shift”: How did Covid-19 impact the real estate market? We asked TREB’s senior analyst

Earlier this week, the Toronto Real Estate Board released its market report for March 2020, which includes information about property transactions in the GTA. As Covid-19 keeps locals on lockdown and nearly halts the economy, most people are wondering how significantly the virus impacted the real estate landscape. We spoke to Jason Mercer, TREB’s senior market analyst, about how Covid-19 killed a red-hot market and why there’s reason for cautious optimism.

Could you summarize the Toronto real estate market before the Covid-19 pandemic?

Right into March, we saw a continuation of 2019, when a lot of buyers who had previously moved to the sidelines were starting to purchase homes. The market had tightened, meaning increased competition among buyers and a high volume of listings resulting in sales. Those factors typically lead to an acceleration in price. For the first half of March 2020, sales were up 46 per cent over March 2019. For historical context, the Toronto market peaked in 2016 with a record 113,000 sales. Then, in the first quarter of 2017, the Fair Housing Plan came into effect, which included a 15 per cent non-resident tax and expanded rent control. That was followed by the new OSFI mortgage stress test rules in 2018, which made it more difficult to borrow. So for the better part of two years, we saw a dip in sales as a result, which is often the case when government policy targets a certain sector of the economy. But demand accumulates over time. After that, you get a return to the marketplace in fairly strong numbers. That’s what we saw in early March.

A month ago, TREB issued a report predicting 97,000 sales in 2020. Is it safe to assume that you’d like to amend that estimate?

Yes. That prediction came out on February 6, so that’s what we forecasted then, along with $900,000 for the average price in GTA, Halton, Peel, Toronto, Durham and some of the smaller municipalities. That’s for all home types including condos. We were well on the way to that sales figure, if not higher. Then, in mid-March, when serious measures were taken across Ontario to prevent the spread of Covid-19, we saw a major shift in market activity. We haven’t updated our predictions yet. We’re only a couple of weeks into the period of enforced social distancing, so we need a little more time to evaluate what’s happening. When we’re midway through April, we’ll be able to provide a more accurate forecast.

In the meantime, which market indicators are you keeping an eye on?

I’m looking at the health-related forecasts, specifically those that look at how long we’ll be social distancing. There was a piece in the Globe recently, based on research out of Simon Fraser University, which laid out some predictions. Last Friday, when the premier gave us the predictions on health outlook, there was a considerable range: between 3,000 and 15,000 deaths, depending on how successfully we self-isolate. So that’s what we’re waiting to see. If you look at the greatest driver of economic growth in Canada, it’s the consumer sector. At the moment, health is the major concern, but once we get on the other side of this, consumers are going to want to dip into the marketplace again, whether that’s going out to restaurants, shopping or resuming their search for a home. The recovery for this will likely be quite fast. It’s just a matter of when that recovery will start.

I like your sunny outlook, but what about all the consumers who go several weeks or months without earning an income?

Certainly, a lot of households are going to feel the pinch from an income perspective. That’s just another factor that depends on duration. Where we may see some differences here compared to a traditional recession is the way the federal government has acted quickly to account for some of the lost wages. A lot of companies are taking advantage of the 75 per cent top-up. We’ve seen that with Air Canada, where they were able to rehire a lot of employees. The point is: there are more programs in place to help people get through this.

Before Covid-19, the biggest issue with the Toronto real estate market was that supply couldn’t meet demand. Is that still the case?

Right into early March, we saw sales growth overtake listing growth, which meant conditions were getting tighter and prices were accelerating. In the second half of the month, we saw a dip in both sales and new listings. When you look at it on a year-over-year basis, both were down by a similar amount. That means the relationship between buyers and sellers has remained consistent—there’s still a similar number of people interested in each individual listing. If that continues, prices might remain relatively stable.

And if it doesn’t, is there a possible silver lining for buyers looking to break into the previously impenetrable Toronto market?

If listings increase and sales flatten or go down, buyers are going to have more negotiating power, but right now it doesn’t make a lot of sense to be out there buying. I think we’re still going to see people taking a wait-and-see approach. The case may be that people want to take advantage of the change in market conditions, but it’s hard to do that when people are being asked to stay at home.

And yet your latest report shows 3,300 sales happened after Ontarians were asked to isolate at home. What does that mean?

I think it’s likely that a lot of those deals were already in progress before self-isolation measures were implemented. We’re going to have to wait until April to really get a sense of the market under strong social-distancing orders.

When the market does come back, is there any type of buyer who may be particularly well-positioned?

I would say first-time buyers may have a possible advantage, in that they won’t have to worry about selling, so they’ll have greater flexibility and could potentially move in right away.

Any predictions on what’s going to happen with mortgage rates in the next six months? The next year?

In the short term, I’d imagine the Bank of Canada will be holding firm until recovery is well under way. The impact on variable rates is likely that they’ll remain somewhat flat, at very low levels. Fixed-term rates are more based on yields in the bond market. From a short-term perspective, right now, rates are low. Considering it’s a tough time in the economy, expect to see rates remain low as we move into 2021.

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Toronto & York region ,March Home Sales Weaken in Response to COVID-19

The overall picture for home sales activity through the Toronto Regional Real Estate Board (TRREB) in March shows a strong year-over-year sales increase of 12.3 per cent with 8,012 homes changing fingers compared to 7,132 sales the year prior.
compare to March 2019 New listings across the region increased just three percent to 14,424 and the average home price increased 14.5 per cent to $902,680.
In March 2020 in the City of Toronto in particular, there were 2,771 home sales, indicating a 12 per cent increase since February 2020, and a 9 per cent increase since last March. Home prices remained unchanged since February, but increased 19 per cent annually to $987,787.
However, despite an overall increase in sales activity, March was characterized by two distinct periods – the period before and the period after COVID-19. These measures included social distancing protocols, economic relief packages, two time emergency Bank of Canada rate cuts, as well as a number of projects targeting property owners and tenants.

Toronto & York in Buyers’ Market Region After COVID-19 Measures

With increasing number of home buyers and sellers choosing to stay out of the market in response to growing COVID-19 concerns and the resulting government measures, the region may experience a rapid change in market conditions over the months of April and may. There were 3,369 sales reported from March 15 – 31, in what TRREB is described as the “post-COVID period,” which is 15.9 per cent lower than the same period last year.
The slowdown in housing activity was most noticeable following Ontario’s emergency declaration on March 17 and resulted in a noticeable change in sales to new listings ratios in favour of buyers’ market conditions across almost all the home types in the area. There were just under half the number of sales across all home types “about 53 per cent drop” in the two weeks following the emergency declaration. This, combined with a 30 per cent drop in new listings for semi-detached and detached houses and a 26 per cent drop in new listings for the condo market, converted the GTA from a stable to a buyers’ market in just two weeks.

Prices Stable Throughout the Toronto Region Since February

In March 2020, the average home price remains stable throughout the region at $902,680 compared to $910,290 last month and still represents a year over year increase of 14 per cent. TRREB reported that prices faced a decrease in the second half of the march, when the sale price of $862,563 for the period between March 15-31.
Detached and semi-detached home prices across TRREB were up 12 and 13 per cent year over year at $1,107,870 and $889,480 each. Condo apartment prices were up 18 per cent to $658,791. Compared to the previous month, prices across all housing types remained flat or experienced a little decrease. with condo apartments most impacted by a 3 per cent fall in prices compared to February.
Toronto experienced the same trend – home prices for all housing types were up year over year. Detached house prices increased 16 per cent to $1,465,826 year over year but remained the same compared to February 2020. Semi-detached home prices are down 4 per cent since February to $1,155,457 but up 13 per cent annually. Condo townhomes were most affected by a 7 per cent monthly drop to $728,250 but up 12 per cent year over year. Condo apartments experienced the highest annual growth rate at 18 per cent increasing to $712,746 but average prices remained flat since last month

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Lake Fill Complete as New River Valley Being Carved Through Port Lands

Generations after the lower stretch of Don River and its mouth into Lake Ontario was straightened and channelized for industry, the mistakes of the past are being corrected. The undoing of what was called the ‘Don Improvement Project’—from a time when environmental issues were not well understood—is part of Waterfront Toronto’s wider redevelopment of Toronto’s Port Lands.

While re-naturalizing the Don River’s mouth with a new curving channel, the current work creates an island by separating the northwest chunk of the Port Lands from the mainland. To be known as Villiers Island for its main east-west street, the area is being decontaminated, provided with infrastructure to house people, and will be surrounded by new parkland.

To create new parkland alongside Toronto Harbour, Waterfront Toronto has been undertaking the Cherry Street Lakefilling project. It commenced in winter 2017 and has now wrapped up. An element of the Port Lands Flood Protection Project, the lakefilling process formed new land around Essroc Quay, replacing its hard edges with a more natural shoreline for the northwest corner of Villiers Island. (Essroc manufactures cement, and will be moving its operations eventually.)

The lake filling work is best summarized in a brief time-lapse video released by Waterfront Toronto last month.

Certain elements of Villiers Island shown in pre-construction renderings and models are now starting to materialize. One area known as the ‘fish cove’ is located at the west end of the island, and is protected bay divided from the lake by a fish gate, and traversed by a pedestrian bridge. This and some other features have been designed to bring wildlife back to the mouth of the Don, looking to undo decades of industrial damage to the area.

The first bit of new road infrastructure for the area is now in its earliest stages: the existing Cherry Street lift bridge—which showed its age during a lengthy malfunction last summer—is to be replaced. Construction of foundation piers and preliminary earthworks are in full swing for the new Cherry Street North Bridge, which moves the major north-south roadway in the Port Lands onto a new alignment further west.

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Ontario Announces MPAC Assessments Have Been Postponed for 2020

Ontario has announced that MPAC assessments have been postponed until 2021.

If you’re unfamiliar, MPAC, or the Municipal Property Assessment Corporation, is the non-profit responsible for assessing the value of homes throughout Ontario. They then communicate their values to the local governments so that each municipality can determine the amount of property tax that is owed.

Every four years, MPAC reassess all of the province’s homes and sets the values that dictate property taxes. The last four-year cycle was scheduled to end this year, but the Ontario government has announced that the 2020 Assessment Update has been postponed. As such, 2021 property taxes for all homeowners in Ontario will be calculated based on their 2016 property assessment.

According to MPAC, if you have received a 2020 Notice of Assessment from MPAC, it could be for one of the following reasons:

  • change to property ownership, legal description, or school support;
  • change to the property’s value resulting from a Request for Reconsideration, an Assessment Review Board decision, or ongoing property reviews;
  • property value increase/decrease reflecting a change to the property; for example, a new structure, addition, or removal of an old structure; or
  • change in the classification or tax liability of the property.

Otherwise, your property taxes will be based on the value of your home on January 1, 2016 (as decided by MPAC at the time). While the Request for Reconsideration (RfR) deadline is usually March 31st of every year, given the state of emergency declared in Ontario, the 2020 RfR deadline has been pushed until 16 days after the emergency has been lifted. So, if you take issue with your current valuation, there’s still time to ask for a review.

One of the consequences of MPAC pushing back their assessments is that it will allow properties that have risen in value over the past five years to continue paying less property tax than they might if properly assessed in 2020. This is even more significant given that Toronto has raised its property taxes this year.

If you’re confused or want to better understand how property assessment and property taxes work, MPAC has put together a simple three-minute video that delivers a solid breakdown.

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Pent up housing demand during COVID-19 may lead to summer market rebound

As Canada prepares to weather the worst of the COVID-19 pandemic, there are already hopeful signs emerging from China where the novel coronavirus originated months ago.

China is maintaining a long streak of reporting no new local COVID-19 infections as its economy is gradually ramping back up after coming to a screeching halt earlier in the year. With it, the Chinese housing market is experiencing a sharp rebound in March, in what could be a bellwether for anticipating Canada’s own market trajectory once the pandemic’s impact subsides in the country.

“China’s private housing market is springing back to life as more sales offices reopened across the country following a nationwide shutdown, saving home builders from a deeper financial slump this year,” wrote South China Morning Post reporter Iris Ouyang in an article published today.

Ouyang cited home transaction volume in eight large Chinese cities that has eclipsed levels observed in the final quarter of 2019. She also noted that property sales in 30 tier-1 and tier-2 Chinese cities tripled in March from February, a sign that the coronavirus crisis was waning. South China Morning Post uses a four-tier system to rank cities in China using GDP, population and political governance data.

“There’s a release of pent-up demand from the Spring Festival and the coronavirus lockdown period in February,” Yang Hongxu of E-House China Research and Development Institute, a Shanghai-based real estate research firm, told South China Morning Post. “Thus we are seeing partial warming up of the property market.”

While nothing can be guaranteed during these extraordinary times, many economists believe that the experience of China and other Asian countries that were first hit by the virus early in the year will largely mirror the experience of Western countries now facing the full brunt of their outbreaks.

“If the dynamics seen in Asia repeat (and we have reason to believe it will) we are about 3 to 4 weeks away from the global pandemic inflection point,” wrote Tamara Basic Vasiljev, senior economist at Oxford Economics, in a research note published today.

“True, the numbers of coronavirus cases continue to rise sharply and western economies have been unable to repeat the success of Asian quarantine and containment policies. But the dynamics of COVID-19 deaths in the West are similar to patterns seen in Asia, pointing to a near turnaround,” she continued.

When this turning point is reached in Canada and new infections begin to ebb, there is promise that pent up housing demand in the country’s major markets will be unleashed in the second half of the year.

The conditions are certainly right for a reinvigorated market in the summer and fall. BMO economist Priscilla Thiagamoorthy wrote earlier this month that Canada’s housing market “found a solid footing in the first couple of months of 2020” before being derailed by the unprecedented disruptive effects of the COVID-19 pandemic.

In response to the pandemic’s wide-ranging economic impacts, the Bank of Canada slashed its key interest rate to a historic low last week.

With strong housing demand in the months prior to the pandemic and all-time low mortgage rates expected when Canada emerges on the other side of its COVID-19 crisis, there are plenty of reasons to expect a housing rebound in the subsequent months.

China is seemingly following this trajectory as its outbreak wanes, bolstering the case further that Canada’s market could bounce back rapidly if it follows the same path.

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How Ontario realtors are coping during the coronavirus pandemic

When the province deemed real estate an essential service due to the coronavirus, it was recommended that realtors stop doing open houses.

Realtor Colleen Koehler said that when Ontario Premier Doug Ford kiboshed gatherings of five or more, that essentially put an end to open houses altogether. Koehler, head of the Kitchener-Waterloo Association of Realtors, says people in the profession have begun looking for creative ways — including virtual tours — to show homes without people actually going in them.

She says that instead of taking clients into a home, the agent will go in, film the house, and take questions in real-time.

Toronto realtor Melanie Piche seconded the notion, saying that realtors have begun to use technology to their advantage.

“Virtual open houses are a way to introduce people to properties and really reduce the number of times people are having to go into each other’s homes,” she said.

Her partner, Brendan Powell, explained that a realtor will show up at a home at a set time and date and will address people’s questions on a live stream.

“People who want to do more than just look at a virtual tour can actually talk to the agent and say, ‘Can you show me what the flooring’s like?’ or ‘Show me what the view from the top floor is like,’” he said. “People can see those things the same way that they might see it if they were there without actually physically being there.”

In an attempt to limit the spread of COVID-19, realtors have also developed a questionnaire to determine someone’s risk levels and have used some creative solutions for when people need to enter into houses.

Another Waterloo region agent, Tony Johal, said in some cases where clients have entered a home, they have been asked to wear a mask and gloves.

“We ask that they don’t linger around the house longer than what they probably should,” he said. “We ask that they don’t sit on the furniture or touch any … surfaces.”

Even with the precautions, the realtors in each city say that the market has paused for the most part during a time of year when it would normally be active.

“From the outside, it sometimes seems like stuff is coming up still as things are still on the market,” Powell said. “But the reality is that there’s … very little that we can do because so much of our business is out and about and in person.”

That said, Piche said she has not seen any panic selling yet.

“If you go back to 2017 when that foreign buyer tax came in, we saw in an instant we were getting four or five calls a day from panic sellers,” he said.

Johal echoed those sentiments, though he has begun to see more balance in the market.

“We haven’t shifted all the way over to a buyer’s market at this point,” he said. “They’re not underpricing their property to drive multiple offers in many cases. I would say more than 50 to 60 per cent of all properties are now being listed at the true market value.”

Ontarians are still trying to figure out how long the quarantine will last and where things will land, including the realtors.

“We don’t know whether or not this will truly create an impact for the rest of the year and maybe beyond,” Johal said.

“But if it’s fairly quickly, then I can see the real estate market acting like an elastic band. Everybody that left is now going to spring back into the market.”

He says that the longer the current state of affairs goes on, we will see an increase in the likelihood that the market will shift more dramatically.

KWAR released its monthly numbers on Thursday, saying that area realtors saw an increase of 13.1 per cent compared with the same month last year.

“Before the pandemic hit our region, I believe we were on pace to set a record number of sales for March with the continuance of high demand, low inventory, and a strong seller’s market,” Koehler said.

The Toronto Regional Real Estate Board reported similar activity, saying that home sales were up 49 per cent in the first two weeks compared with last year, but sales were down 15.9 per cent compared with last year for the rest of the month.

Given the lockdown Ontarians are under due to the coronavirus pandemic, many were left wondering why real estate was deemed an essential service by Ford.

“Really, that decision was only made to allow us to work with those clients, buyers and sellers, that are already in the pipeline,” Koehler said.

“We have lots of properties that are currently closing,” Koehler said.

Kingston realtor Matt Lee said his agency is recommending that clients put the pause button on the search for homes but there are times when it is impossible to do so.

Between the military bases and the prisons, Kingston has a transient population, with some residents being forced to move quickly.

“Nobody knows what kind of position other people are in,” Lee said.

 

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For a City of the Future, Mississauga’s Parking Spot Policy is Stuck in the Past

Mississauga currently requires condos to have one parking spot per studio unit; more for larger units. But as the city moves to a more transit-friendly, urban place, is it appropriate to keep up that ratio?

In fact, some condo developers say many owners in the downtown already don’t want a parking space. Actually, developers and city managers and consultants all agree there needs to be less parking, though they may disagree over how much and how fast those spots should disappear.

“Clients I am representing now are all looking for (parking) reductions,” says Ed Sajecki, Partner and Co-founder of Sajecki Planning and the former commissioner of planning and building for Mississauga.

The city expects to release a parking requirements study in about a year says Jamie Brown, manager of municipal parking for Mississauga.

Parking and the new Mississauga
What does less parking have to do with a more urban Mississauga?

As the downtown gets denser, with more apartments and condominiums going up, more commercial development – meaning jobs and shopping and entertainment being within walking, biking or transit distance from homes – and better transit options meaning less need for cars, fewer people want to pay for a parking spot they don’t need.

“Parking is a fertility drug for cars,” says Sajecki, quoting a city councillor during a debate on the issue.

And the city wants to see less car use, as congestion grows alongside the city’s growth.

“One of the goals of the city’s strategic plan is to become a transit-oriented city” with less reliance on single-occupancy vehicles, says Brown. The Hurontario light rail transit, expected to be completed in four to five years, is a key factor fuelling the urbanization of Mississauga.

“The parking master plan was approved by council last June,” he says. “The approach is, in most cases, looking to reduce the requirements for parking for developers but through a precinct approach,” says Brown, referring to the idea that requirements for parking would be dependent on what different areas of the city offer in terms of factors like transit and walkability.

“The planning department is doing a follow-up study to review and revise parking developments based on that,” says Brown. The follow-up study is expected to take about a year.

Some Ideas
One idea the city is considering is to create parking that is not tied to one user.

“We look at mixed-use situations where parking can be used by different uses at different times. For example, a mall site may share spaces between office and retail since they have different peaks,” says Jason Bevan, director of city planning strategies. This can also apply to visitor parking, he adds.

“The precinct approach is based on what’s in the area,” says Brown. Precinct 1 areas, like downtown or Port Credit have more options and “will have lower parking requirements. Precinct 4 areas, like Meadowvale, would require more car use and parking.”

The parking master plan recommends looking at other factors, like “curbside management strategy,” where the city looks ahead to parking demands from other vehicles, like car share services such as Uber and Lyft, increasing deliveries through online shopping, and even autonomous cars in the future.

Affordability
The parking issue is not just one of congestion. There is also the cost to the developer, which affects how easy it is for the city to attract commercial developers to the downtown.

“The cost of constructing office space below grade is expensive… which gets factored into lease rates,” says Sajecki. The core is “competing with office parks,” where there is a lot of free surface parking. And with condos, since parking is expensive to build, and adds a cost to buyers, one way to make housing more affordable is to reduce parking, says Brown.

“Mississauga is starting to worry … the price (of housing) keeps getting higher,” says Ralph Bond, executive chairman at BA Consulting Group Ltd., a parking and transportation expert who has condo developer clients. “If we can reduce the cost of that housing, it would be beneficial.”

“If you want to price condos so lab technicians and cleaning staff can be close (to work places), you want to keep prices of units lower, and not force them to tack on the cost of parking spaces,” says Bond.

In fact, some developers are selling units separately from parking spots, says Sajecki.

Speed of Change
“There has been a gradual reduction in rates in some parts of the city,” says Bevan, director of city planning strategies.

“There is justification for varying parking rates in different areas,” says Bevan, adding the city is looking at breaking down how many parking spots there should be in different “precincts,” based on how much transit is available, and how much urbanization.

While conducting its own study, the city also allows for developers to do case studies, often in similar, nearby buildings, to determine on a case-by-case basis whether a building can be built with fewer spots than the city requires.

“If a developer wants to request a reduction in parking spots … we will consider it.”

“Sometimes developers will ask for lower numbers (of parking) than surveys or the city recommends,” based on what prospective buyers tell them in the sales trailer, Bevan says. “But we have to be careful.” The city has to plan ahead, he explains, and plan for parking for the long term.

“A young couple may not have a car but in two to three years, they may require a car to take a child to daycare.” Also, if there are not enough spaces, people may start to park elsewhere, clogging streets and even parking illegally, he adds. This would transfer the burden of parking from the builder to the city and residents.

“Once a building is built, you can’t easily add spaces.”

Pandemic problems
A big wrench in the works may be the fallout from the COVID-19 crisis.

“Going forward, there will be incredibly challenging times after we hopefully get out of the COVID-19 situation,” says Sajecki.

At the best of times, the city needs funds to run its public transit system, even if higher levels of government help pay to build it.

The city’s sources of revenue to run transit largely come from property taxes, business taxes, user fees and its share of the gas tax. All of these will be under pressure because of the economic consequences of the pandemic, Sajecki says.

As for whether working from home will become an entrenched habit after enforced lockdowns end, “It’s too early to see any long-term impacts of work-at-home,” says Bevan. “The city does an employment survey each summer – this year’s survey will likely not happen due to COVID-19 – so we should start to see any residual impacts on where people are working in 2021 data and beyond.”

Sometimes the market is ahead of the city’s thinking, says Sajecki. “Mississauga was developed around the automobile” and developers pushed for more parking spots. “Going forward, that market is going to shift,” as developers, at least in the downtown, want to see less requirements for parking.

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Condo boom puts Toronto atop Crane Index … again

The booming Greater Toronto Area has again taken top spot on the North American Crane Index, with the region hosting an astounding 27 per cent of the cranes counted in 14 of the continent’s largest and most active urban markets.

The Q1 2020 report, compiled by international construction services firm Rider Levett Bucknall, presents a “simplified measure of the construction industry in 14 key markets.”

Toronto’s crane totals dwarf those of any other North American city. Los Angeles placed second with just 10 per cent of the total.

In actual numbers, that’s 121 cranes dotting the Toronto skyline compared to 47 in Los Angeles — which has a metro population of about 19 million, compared to the GTA at about six million.

Perhaps even more surprising, Calgary placed third with 37 cranes, just ahead of Seattle at 36 and San Francisco at 33. New York had 26 cranes.

“It’s the highest it’s ever been,” said RLB principal Terry Harron, who heads up its Toronto office. “Probably the biggest driver, out of the 121 cranes that we counted in January of this year in Toronto, 88 of them were on residential buildings; most of them were condominiums.

“There are some rental apartment buildings beginning to be built in Toronto, but it’s almost entirely driven by the condominium market.”

Last year, Harron said Toronto’s crane count was 120.

Immigration driving residential demand
Harron said Canada’s immigration policy, which allowed about 350,000 new residents into the country during 2019, is driving the growth.

Of that influx, about 118,000 people settled in the GTA, he said, quoting StatsCanada data.

“There has not been a lot of commercial in Toronto in the past 10 years. There has been some, but it’s almost entirely driven by the residential.”

As an example, he cited the huge downtown multi-use project The Well, which alone accounts for eight of the cranes.

The joint venture between RioCan REIT (REI-UN-T) and Allied Properties REIT (AP-UN-T) includes six high-rise towers and will comprise more than three million square feet of space for apartments, condominiums, offices, retail and other uses.

“There are a number of other towers, commercial towers, that have been announced (for) the next few years, particularly along the rail corridor. We are starting to see an uptick in commercial,” Harron said.

Despite the COVID-19 outbreak, which could push the continental economy into recession, Harron doesn’t foresee a dramatic downturn in Toronto’s high-rise construction activity — at least not for the near- or mid-term.

Thousands of pre-sold condos
“I read on Stats Canada . . . I believe 70,000 residential condominium units have been pre-sold in the Toronto market and have not been built yet,” he said. “That’s a staggering number.

“That will lead to a very healthy market for a number of years to come. I believe the absorption rate right now is between 20,000 and 30,000 units per year, so that will give you an indication of where the market might be.”

What could impact growth down the road would be a downturn in immigration – and that could arise from the pandemic.

“The only proviso I would add to that is one of the major things driving the residential market in Toronto is immigration to Canada,” he said.

“With all the restrictions currently in place for travel now, and probably for some time to come, I have to imagine (immigration) will experience a huge drop this year.

“Now, will that then create less demand for the market and maybe a slowdown? Who knows.”

A slowdown, however, could also ease pressure on construction costs. In turn, that could make more projects economically viable, because there has been dramatic upward pressure on materials and labour costs in recent years.

“There have been a number of projects cancelled in the last 12 months in Toronto,” Harron acknowledged.

“I believe on about 20 condominium towers, the developers either could not get numbers from subcontractors and trades, or the numbers were coming in much higher than they had in their business plans and suddenly the project wasn’t economically feasible.”

Other markets in Crane Index
In Calgary, where 37 cranes were visible on the skyline, activity was also being driven by the multires sector. Harron said despite the current economic woes in Alberta, builders believe the Western economy will rebound.

“There’s definitely a lot of activity and again, that’s residential-driven,” he said. “There are developers in Toronto who have now decided that they believe in the long term for Calgary.

“They are starting projects now that they hope, when the economy turns around in Western Canada, that there will be demand for this product.”

Across North American, the Crane Index survey found:

* residential and mixed-use projects combined accounted for 70 per cent of all cranes counted;

* cranes dedicated to healthcare projects dropped 33 per cent from previous counts;

* hospitality projects experience a decrease in active cranes of 50 per cent.

“The majority of locations included in the Crane Index are clustered near or at the top of the construction-cycle curve, meaning they will begin to enter a phase of decline in the coming years,” said Julian Anderson, president of RLB North America, in an email to RENX.

“This, coupled with the likely recession triggered by the coronavirus pandemic, shapes the short-term outlook for North American construction as a period of contraction.

“Further out, 12 to 24 months, we are anticipating that the industry will continue to recover from the COVID-19-induced recession.”

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TD Bank chief optimistic of steady recovery after the pandemic

Toronto-Dominion Bank’s CEO has expressed confidence that the domestic financial system and household purchasing power will regain valuable lost ground once the coronavirus threat recedes.

Speaking to BNN Bloomberg earlier this week, Bharat Masrani stated that the rate of recovery in the post-outbreak environment will heavily depend on how fast things get back to normal.

“How deep this [downturn] is is obviously important but more important is how long, what’s the duration of this. If this turns out that we can bounce back to some extent next quarter, there is a good chance of having a V-type, or V-ish type of recovery,” Masrani explained. “But without a doubt, you can see some recovery, and then a meaningful recovery to come because you will not have some kind of forced lockdown.”

“Now, it will be interesting to see how steep the V[-shaped recovery] is, but I certainly expect good growth coming out of the crisis.”

However, the revitalization of the Canadian housing market might still be a year away, Royal Bank of Canada senior economist Robert Hogue estimated in a recent report.

“We see the outlook improving markedly next year in most markets,” Hogue said. “Exceptionally low interest rates, strengthening job markets, and bounce-back in in-migration will generate substantial tailwind. We project home resales to surge more than 40% to 491,000 units in 2021.”

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What the Construction Shut Down Means for Residential Buyers in Toronto

With Ontario announcing the shut down of the industrial construction industry in the province on Friday, and alongside with it, many residential construction projects as well, pre-construction buyers suddenly have a few questions on their mind.

Until April 2, all construction was considered an essential business and allowed to stay open after the province ordered the closure of all non-essential businesses on March 24.

As of the government’s latest announcement, new residential starts will be stopped, but residential projects “near completion” can continue.

These are the types of residential construction projects on the essential businesses list, according to ConstructConnect:

  • When a footing permit has been granted for single family, semi-detached and townhomes
  • When an above-grade structural permit has been granted for condominiums, mixed use and other buildings
  • When the project involves renovations to residential properties and construction work that was started before April 4

Construction groups are generally behind the move. The Residential Construction Council of Ontario (RESCON), for instance, said in an April 3 release that the move balanced the safety of workers while acknowledging the need to add housing in a tight market, as well as “contractual responsibilities industry has to homebuyers.”

“There are many people who are waiting for their homes to be finished in the next few weeks. We already have a significant housing crisis in Ontario and most of these homeowners who have sold their homes are at risk of being left on the street without these measures,” said Richard Lyall, RESCON’s president, in the release.

Construction unions had been calling for the shut-down of sites, citing worker safety.

Buyers
Buyers who have already signed contracts may have to live with delays beyond what was laid out in their contracts, says Azin Ghorbankhani, a lawyer with Seif real-estate law firm.

A delay in occupancy dates and final closings is allowed based on most builder agreements, she says, but this crisis may extend that.

“Almost every pre-construction condo is being sold with Tarion Warranty. The Tarion warranty has a clause in the agreement which states that builders may extend any closing dates due to unavoidable delay.” There is a maximum of $7,500 credit given to purchasers if construction is delayed.

However, she says, “In this case, COVID-19 is declared a pandemic by (the World Health Organization) and therefore considered an unavoidable delay. Builders can extend the critical dates by the length of the unavoidable delay without needing the approval of the purchaser.” So, “if the builder notifies the purchaser in writing setting out the description of the delay and the estimate of the duration, and new critical dates for them,” purchasers may not be eligible for the credit.

But, she adds, if a builder fails to do this, then purchasers can ask for this compensation on the dates mentioned in their agreements.

Three scenarios
For those who are either considering buying pre-construction units, or those who have already signed contracts, there are three scenarios to consider, says Nima Khadem, broker with Royal LePage Signature, who partly specializes in pre-construction.

Projects That Have Sold Recently

The majority of projects where the builder already has permits are going ahead, Khadem says. But buyers can expect longer delays than in normal times, for a variety of reasons, including that suppliers may have trouble getting materials to the builder.

Some builders may have cancellation clauses in the contract allowing them to cancel their projects without having to pay purchasers any penalties. Though purchasers would get their deposits back, they should have their contract reviewed by a lawyer who specializes in pre-construction contracts, Khadem says.

One consequence of the effects of COVID-19 on the economy is that people may have trouble making the payments on their deposits. “If people default on deposits, the builder may have trouble getting financing for the project.” October and November were very busy for pre-construction sales, he says, and those projects may be in greater danger because of the financing issue.

Although buyers have a legal obligation to pay according to their schedule, “Purchasers may ask their lawyers to request for an amendment to their payment periods, which is builders’ discretion to change,” says Ghorbankhani.

Projects Near Completion

Those projects that sold about a year ago will already have all the buyers’ deposits and the construction financing arranged, says Khadem. They may be delayed but are likely to go ahead, he adds.

There are several projects in Toronto that are near their occupancy date, says Khadem. But those that were originally slated for move-in in June or July may be delayed because suppliers and contractors are being delayed due to the COVID-19 situation.

New Projects

People who are in the market and are considering projects that just started selling or are about to launch should make sure they have enough flexibility to ride out inevitable delays, Khadem says. But if they know they have to move in 2022-2023, they may not want to buy now, he adds, suggesting projects could easily be delayed a couple of years due to the COVID-19 situation.

They should also find out whether the builder got their permits before the hammer came down. They can ask the builder or find the project name or address online through the Toronto Committee of adjustment.

Prospective buyers should research the builder, he says, looking for things like previous projects that were unduly delayed or cancelled. For those with the flexibility to ride out long delays, this may be an investment opportunity to lock in to lower prices, unless there is a market crash, he says.

“Average condo sales were up 6.7% a year in Toronto over the last decade,” he says. Real estate is a long-term investment.

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Can housing construction lead the economy out of recession?

Aside from replenishing the national inventory, building new homes might also play a vital role in bringing the US economy back to health once the COVID-19 outbreak is contained.

The National Association of Home Builders reported that building 1,000 average single-family homes creates 2,900 full-time jobs and generates approximately $110 million in taxes and fees, which the government can use to support police, firefighters, and schools.

Similarly, building a thousand rental apartments results in 1,250 jobs and $55.91 million in taxes and revenue for local, state, and federal government, while $10 million in remodeling expenditures generates 75 jobs and roughly $3 million in taxes.

“Before the coronavirus pummeled the US economy, housing was on the rise with January and February new-home sales numbers posting their highest reading since the Great Recession,” said NAHB Chairman Dean Mon. “The demand is clearly there, and as this study shows, we expect that housing will play its traditional role of helping to lead the economy out of recession later in 2020 when the pandemic subsides.”

However, building new homes and apartments is more likely to create jobs in industries that produce lumber, concrete, lighting fixtures, heating equipment, and other home remodeling-related products. Other jobs are generated in the process of transporting, storing, and selling these products, according to NAHB.

Last week, the Department of Homeland Security designated the construction of single-family and multifamily housing as an “essential infrastructure business,” which means that construction could continue in places under stay-at-home orders.

Mon said that NAHB has already come up with a plan to protect workers from coronavirus.

“Ensuring the health and safety of home builders and contractors is our top priority,” Mon said. “This is why NAHB and construction industry partners have developed a coronavirus preparedness and response plan specifically tailored to construction job sites. The plan is customizable and covers areas that include manager and worker responsibilities, job site protective measures, cleaning and disinfecting, responding to exposure incidents, and OSHA record-keeping requirements.”

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TRREB’s March sales figures show “clear break” between pre- and post-COVID-19 periods

The latest home sale figures released by the Toronto Regional Real Estate Board (TRREB) revealed a “clear break” in market activity in the GTA between the periods before and after the COVID-19 pandemic hit Ontario.

According to TRREB, the overall March sales result was driven by the first two weeks of the month, which saw 4,643 sales reported in the period before the week beginning March 15 – accounting for 58% of total transactions and representing a 49% compared to the first 14 days of March 2019. However, only 3,369 sales were reported in the period beginning the week of March 15 – down by 15.9% compared to the same period in March 2019.

Figures from TRREB also revealed that new listings were up by 3% year-over-year to 14,424 for March as a whole. However, new listings dropped on a year-over-year basis during the second half of the month (beginning March 15) by 18.4%.

Meanwhile, the average selling price for March 2020 as a whole was $902,680 – up 14.5% per cent compared to March 2019. However, the average selling price for sales reported between March 15 and March 31 was $862,563 – down from the first half of March 2020, but still up by 10.5% compared to the same period last year.

“Despite sales and listings trending lower in the second half of March, demand for ownership housing remained strong enough relative to listings to see the average selling price remain above last year’s levels, including during the last few days of the month,” said Jason Mercer, chief market analyst at TRREB. “As we move through April, we will have a clearer view on how social distancing measures and broader economic conditions will influence sales and ultimately the pace of price growth.”

“While COVID-19 has clearly had an impact on the housing market, the late March numbers still suggest that there is activity in the marketplace,” said John DiMichele, chief executive officer of TRREB. “TRREB continues to strongly recommend stopping in-person open houses and has provided its members with guidelines for social distancing. TRREB’s professional development staff are working hard to educate its members via webinars on using technology in innovative ways to conduct business virtually.”

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Site closed: No new residential construction in ON after April 4

Speaking from Queen’s Park on Friday afternoon, Ontario Premier Doug Ford announced a halt to all residential construction in the province. As of 11:59 p.m. on April 4, the only projects allowed to continue will be those single-family, semi-detached and townhouse properties which have secured either footing or above-grade structural permits. Renovations to residential properties that were initiated prior to April 4 will also be permitted.

While the announcement was hardly unexpected considering the surging number of COVID-19 infections in the province, it comes at one of the worst possible times for Ontario home buyers. Demand for properties, both new and old, continues to be driven by rapid population growth, while active inventory is at record lows in community after community.

“If construction projects are delayed for four or five months, maybe the market will absorb that, and maybe we won’t feel a shock,” says Bosley Real Estate’s David Fleming. “But if you’re talking every single project that was supposed to be started is now delayed six, eight months – or let’s say that it takes longer to start up again after [builders] are given the green light – I do think that in the future you could have that period where you’re expecting the volume to come onto the market – and it doesn’t – and prices go up as a result.”

The question most prospective home buyers may be turning over in their minds is whether the higher prices associated with lower supply will be overpowered by the dip in prices most are expecting in the coming months. According to PSR Brokerage’s president of pre-construction and development, Ryan Yair Rabinovich, the price drops many are hoping for may not materialize.

Resale buyers, he says, unless they’re forced to by their own financial circumstances, are unlikely to sell if home prices fall, especially those who survived the global financial crisis of only a decade ago.

“2008 and 2009 is still fresh in many real estate owners’ minds,” he says. “They realize that it wasn’t actually as bad, and it didn’t take as long to recover, as people initially thought it would take.”

For new product, the likelihood of lower prices is even less likely, as developers are under severe pressure for their projects to remain profitable.

“Ninety-five percent of developers in the GTA use construction loans from banks,” Rabinovich explains. “Banks won’t lend a single dollar toward construction if you don’t have the minimal profit margin in a project.”

While he hopes that construction projects will be allowed to fire up in eight to 12 weeks, Rabinovich says shuttered projects will still face the same scaling-up challenges they dealt with before the COVID-19 crisis, which will only add to the delays.

“It’s not something where Ford unlatches the lock on this thing, and the next day you have all your trades on site. It requires a lot of coordination and lot of time,” he says.

With new construction projects often taking anywhere between four and six years to complete, the effects of the construction halt are impossible to gauge. But one thing is certain: anyone in Ontario who complains about “all the cranes in the sky” today will be feeling their absence soon enough.

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Foreclosures at record lows in February: So what?

On April 1, Attom Data Solutions released its February 2020 U.S. Foreclosure Market Report. As the U.S. housing market was cruising along at breakneck speed prior to the COVID-19 virus landing on American shores, the numbers were predictably immaculate: only 48,004 properties in the nation had recorded foreclosure filings in February. It was the lowest number of total foreclosure filings the company has recorded in the decade-and-a-half since it began tracking such data.

Any figures related to the housing market – or any market, for that matter – that were collected prior to the pandemic need to be taken with a U-Haul’s worth of salt. MPA reached out to Attom’s chief product officer, Todd Teta, for a little context.

Mortgage Professional America: Were there any surprises in the February data?

Todd Teta, CPO, Attom Data Solutions: This was a steady-as-you-go reflection of the continuing strong housing market across the country. The national February figure was up a bit from January, but fell from a year earlier to a level that’s been fairly consistent over the last year and a half. Monthly figures have swung back and forth but without major changes recently. Overall, the numbers are far less than they were several years ago, reflecting the strong national economy and housing market.

There are areas of concern around the Midwest, West and South where foreclosures were up quarterly as well as annually. That will deserve a close watch in the coming months, especially as the fallout from the coronavirus hits.

MPA: What story do you think the numbers tell?

TT: The February foreclosure data offers up one of the many signposts of an eight-year housing market boom that has touched almost every corner of the country. The latest foreclosure numbers are barely a quarter of what they were in 2012, when the housing market was just starting to recover from the fallout following the Great Recession – and even below where they were during the pre-recession boom. That’s truly a remarkable improvement.

MPA: How different do you think the numbers will be in the next few months?

TT: Now we get to the part where we say everything is in flux because of the potential impact of the coronavirus pandemic.

On the upside, the next few months may actually see another drop in foreclosures because banks have pledged to temporarily hold off on going after homeowners who fall behind on their mortgages. But how long that will last is unknown. Millions of people have lost jobs or work hours, which can only hurt their chances of staying current on their mortgages.

At some point in the not-too-distant future, banks will move forward with foreclosure proceedings on delinquent homeowners because they will need to recoup at least some of what they’ve lent. Depending on how many people fall behind, this could have a severe impact on the housing market, similar to what we saw 10 years ago when empty properties in foreclosure pockmarked neighborhoods around the country and hurt property values that were already in free-fall.

The worst-case is a double-whammy of a foreclosure surge on top of property values dropping amid a lack of buyers.

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