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California engineer Curtis Wong is applying tech innovation to the affordable housing crisis and hoping his ideas will take hold across the U.S.

The former employee of Elon Musk’s SpaceX is the founder of startup Cloud Apartments, which has a patented design for contemporary, cool-looking apartment modules and snap-together construction. The young company, based in San Francisco’s Bay Area, has received state approvals and they are working on a San Jose, Calif., site to erect a six-storey, 205-unit apartment building over a concrete podium, made up of “tech’d out” studios and one- and two-bedroom units. He has four other deals underway with developers, totalling 1,000 units in the Bay Area. Because off-site, factory-built modular construction is generally much faster than conventional on-site construction, he says the units will be more affordable due to savings of around 30 per cent.

Mr. Wong says it’s going to take a more creative approach that defies the norm if North Americans are going to solve the affordable housing problem. He had worked as a structural engineer for several years but grew tired of the lack of innovation, so he joined space exploration company SpaceX and worked on the launch pad in Cape Canaveral, Fla. The work pace was thrilling but too exhausting, so he went back to school and obtained a masters of business administration degree from Harvard University. He quickly discovered he could apply his tech know-how to housing, by standardizing the process.

“There are reasons that innovation is so hard within construction compared to SpaceX, if you want to compare those two worlds,” Mr. Wong says. “With SpaceX, there are no regulatory government agencies watching you the whole time, making sure you are following building codes. You cowboy it, do what you want and a lot of cool stuff happens. Within construction there are lenders, developers, government agencies permitting all that stuff, and it slows you down from innovating. … What I know about innovation, and bringing that back to the construction industry was pretty tempting.”

The goal is to wipe out the negative image of modular construction, the way that the electric car went from being an outlandish idea to today’s Tesla. The unique angle on construction is that the high-tech units are shipped to site 95-per-cent complete, a “plug and play” approach to building. Cloud’s studio apartment has built-in moveable furniture, such as bed that lifts up to make way for a couch, a projector for TV watching and an integrated battery that can power the unit off the grid for 24 hours. Such features are useful in the face of climate change.

But the key to his concept is not just designing cool interiors, but standardization of the units. He says they can reduce construction time by 50 per cent, and with their team of collaborators, they have the capacity to build about 10,000 units a year.

A standardized building design would also expedite permitting times because developers wouldn’t have to start all over again as they do with a one-off design.

“If you want to talk about how to use modular to save on costs, you have to think about it like how you think about automotives,” Mr. Wong says. “Henry Ford reduced the cost to build a car based on the assembly line that he pushed. The way he did that, he had the assembly line, mass efficiency through the factory, and standardization of what the automobile is – you paint them all black, you churn them out make them accessible to mainstream America and the world.

“What we are doing with Cloud Apartments is using the same mindset with modular, because currently modular is not standardized. Every building is still a one off, and totally different.

“We are completely standardizing the units by thinking of them like products.”

The hotel industry has already cottoned on, with major hotel brands such as Marriott now building modular construction. The chain just built the world’s tallest modular hotel in New York with pre-fabricated and pre-furnished guest rooms, a 26-storey building topped off with a modular rooftop bar.

“Building in a factory is how luxury cars are made, so the potential is much higher to make a nicer quality [home]. There are a ton of efficiencies, not just the improved quality, but also driving down the cost of housing.”

His company works with local factories and furniture designers. The units are state-approved, although they would still have to be approved at the local level.

“Out here, we have state of California permits for factory built housing. We did that whole process so that the Cloud-S unit can be built anywhere in California now. It’s one little advantage of modular construction, at least in state of California, that you have a better approval process.”

Part of the reason that the industry is starting to look to off-site construction is for the same reasons that European countries and Japan embraced the method: to reduce energy costs. The labour shortage is another.

According to BuildForce Canada, the residential construction sector will need 107,000 new workers over the next decade. And that number doesn’t even factor in federal initiatives to double the number of new homes built over the next decade, to address record-setting immigration.

“The idea of importing highly skilled tech workers is great, but where are they all going to live?” asks Rocky Sethi, chief operating officer for Adera Developments.

Adera is one of several Vancouver area developers that have embraced the use of off-site construction. This year the company launched two projects built with its patented mass timber sound absorbing panel system, Pura in Surrey, B.C., and SoL in West Coquitlam, B.C. Mr. Sethi says prefabricated off-site methods used for their Crest condo development in North Vancouver, B.C., resulted in a labour reduction of about 50 per cent. The building was framed 30-per-cent faster than usual, says Mr. Sethi. That’s helpful, because the number of tradespeople is in rapid decline, due to the fact that they’re aging out and the younger generation isn’t going into the trades.

“I’ve been in construction for over 20 years and the funny thing is we always talk about a shortage of labour. Skilled labour has always been a challenge but now it’s a challenge getting labour of any kind. And it’s not just through peak periods,” he adds. “We don’t have enough people to sustain us through a somewhat slower market over the next six to 12 months.”

But the challenge to using modular is the many municipal regulations that get in the way and don’t necessarily add anything to the project, Mr. Sethi says.

“What the industry needs to focus on is delivery of housing. Otherwise, it just makes my development more expensive and takes more time for approval. [For example], re-orientating a building, how does that make one bit of difference to somebody who needs a home to live in? It doesn’t.

“I think that modular does have a place, but we have a long way to go until that’s widely adopted for a number of reasons way outside the control of modular home builders. We are talking provincial and municipal rules and regulations, and we have 22 municipalities in Metro Vancouver that all have their own requirements.”

The innovative construction business is not without its risks. Mr. Wong worked on Starcity Minna, a 16-storey, 270-unit residential modular high-rise targeting middle-income residents that was also started by a tech entrepreneur. Plans for the project fell apart during the pandemic. But despite pushback, it had reached the approval stage. Mr. Wong sees that experience as a learning opportunity.

“That was somewhat of a bomb when the planning commission in San Francisco saw we wanted to do modular. It’s probably the same in Vancouver and everywhere, ‘oh it’s low-quality housing, we don’t want it.’ But one thing that is starting to change is that reaction is disappearing from other cities that have done modular.”

Craig Mitchell, principal of Vancouver-based BlackBox Offsite Solutions and modular construction expert, says he’s been tracking U.S. companies such as Cloud Apartments because they are moving into market-rate rental. In Canada, the modular industry has seen growth because of government-funded social housing.

Mr. Mitchell said there is considerable interest among private U.S. developers to use off-site construction.

“It’s the private developers and owners that have now adopted modular as they are seeing great case studies, which his attracting considerable investment,” he says of the U.S. market.

“The development costs with conventional construction are astronomical, so they are beginning to accept alternate forms of construction more readily, which are bringing new players into the market.”

It helps that the U.S. has denser markets than Canada, he added.

Toronto’s development industry has been sent into a frenzy with Pinnacle International’s submission of revised plans for its Pinnacle One Yonge development that would increase the height to 92 and 105 storeys. Designed by Hariri Pontarini Architects, the latest revisions see additional height and density requested for the phase 2 and 3 towers of the project, increasing the height by enough to position the development, if approved, as the tallest building in the country, a title that is also being sought by Mizrahi Developments at The One.

The proposed changes are outlined in an application for Zoning By-law Amendment that seeks to permit the approval of height increases of 10 and 12 storeys for the approved 95- and 80-storey towers, respectively. As a result, the phase 2 tower would reach a staggering 105 storeys with a total height of 345m, and the phase 3 tower would be boosted to 92 storeys, reaching a height of 306m. Instead of just one ‘supertall,’ a building over 300 metres, there would be two at this site.

These height increases are being applied to the most recent designs for phases 2 and 3, which came forward in 2021. The designs offered an update to a previous design iteration which dated back to 2017, and made some notable alterations to the exterior massing, specifically on phase 2. Looking at the 2017 design below, phase 2’s exterior was visually characterized by non-load-bearing diagonal frames that appeared on curtainwall sections, while in terms of massing, the inward tapering of both the base and the top of the tower, and the rounding of the corners worked towards creating a less orthogonal volume that was a distinct form in the skyline.

The 2021 design, below, reimagined the appearance of phase 2 in favour of a simpler design that allowed for a notable increase in balcony area. The diagonal framing was replaced by fewer but more sinuous lines that rise from the podium and climb the towering elevations, adding some visual articulation to the corners of the building. The tapering still occurs at the top of the tower, but rather than getting narrower at the base, the tower emerges more gradually from the podium, receding on a smooth curve.

The proposed 2022 additions to the heights of the phase 2 and 3 buildings would bring 958 and 859 units respectively, or a total of 1,817 units to the site.

For several years now, both Pinnacle One Yonge and its fellow prospective supertall, The One, have generated an alternating flurry of headlines. Skyscraper fans of Toronto and beyond have followed closely as both projects rise, captivated by the promise of being witness to the completion of Canada’s first supertall building. With both projects delivering world class designs that bear the marks of globally renowned architects, the only thing more media-friendly than the towers themselves has been theatrics of a perceived competition between the two.

Whether intentionally or not, the projects have been viewed as rivals not only in a race to be built first, but also in a contest of height, and as this most recent revelation demonstrates, there has been no shortage of surprises along the way. For those keeping score, in the wake of Pinnacle’s latest move, The One still has a head start in terms of construction progress, but as far as being the tallest building in Canada is concerned, the scales have been tipped.

UrbanToronto will continue to follow progress on this development, but in the meantime, you can learn more about it from our Database file, linked below. If you’d like, you can join in on the conversation in the associated Project Forum thread or leave a comment in the space provided on this page.

 

Count economist Benjamin Tal among those who do not see a housing crash in Canada in the near future.

Tal, the deputy chief economist at CIBC, also suggested during a recent speech to engineers that the world’s producers are showing signs of coming to grips with the global supply chain problem, praised the Bank of Canada for showing restraint on its latest interest rate hike and gave a thumbs-up to a recent housing expansion plan introduced by Ontario’s Doug Ford government.

The economist was the morning keynote speaker on the second day of the Association of Consulting Engineering Companies — Canada national leadership conference held Nov. 1 to 3 in Ottawa. His session, moderated by Jeff Lutzak, partner at RSM Canada, was billed as Canada’s Economy: Where We Are Today and Where We Will Be.

Tal offered his analysis of the last two years of Canada’s extraordinary housing market.

“The housing market was on fire. We are talking about what, a 46-per-cent increase in two years? That’s madness,” he said of late 2020 into early 2022.

What happened was that early in the pandemic, most of those who lost their jobs were low wage earners.

“But homebuyers, traditional homebuyers, their job was there, their position was there, their income was there, and interest rates were in the basement,” Tal said.

“If you think about it for a second, homebuyers during COVID got the benefit of a recession, with a significant decline in interest rates, without the cost of a recession.”

He has never seen anything like it, Tal said, the sense of urgency to get into the housing market during that period.

Seen in retrospect, those purchases can be considered front-loaded activity.

“We borrowed activity from the future,” Tal said, and now, amidst spiking interest rates, housing prices in the GTA have gone down 19 per cent since their February 2022 peak and further drops are projected into next spring.

Said Tal, “The future has arrived. This is not a crash. This is not a meltdown. This is basically reallocation of activity over time.”

Tal noted he was speaking just about the same time as Canada’s Minister of Immigration Sean Fraser was announcing an expansion of immigration quotas for the next three years, reaching 500,000 in 2025. Negotiations will ensue to determine how many from the enhanced economic-immigrants category will be skilled construction workers.

The need for more skilled workers in that stream is desperate, Tal said, noting 400,000 immigrants were welcomed to Canada last year.

“How many construction workers did we get out of those 400,000? Zero,” he said.

But “overall it’s a very positive story,” said Tal, “We got six times more immigrants than the U.S. and that’s one of the reasons why our labour market is better supplied than others.”

Rising costs in the construction sector are having a major impact on project investments, Tal said, with numerous reports of delays and outright cancellations.

“There are three sources of inflation: supply-chain-driven inflation, demand-driven inflation, and we-don’t-know inflation,” Tal said. “Supply chain is 50 per cent of inflation. You remove supply chain from the story, we remove 50 per cent of inflation.”

And that appears to be happening, Tal said — logistics are improving, freight is booming, and even the number of truck drivers in the U.S. has escalated 20 per cent since before the pandemic.

Assessing recent actions of the Bank of Canada, Tal said the move to raise interest rates only 50 basis points in late October signalled that in future Governor Tiff Macklem would move moderately in attempting to tame inflation, cognizant of the need not to sabotage the economy.

The bank is saying, “We don’t want to overshoot,” said Tal.

“You can pray that the Bank of Canada will stop at 4, 4.5 per cent. That’s our forecast. Then keep interest rates relatively stable for a year and then start cutting.”

Federal fiscal policy must be aligned with the Bank of Canada, Tal said.

Otherwise, “It’s like putting a humidifier and a dehumidifier in the same room and seeing who wins.”

Tal also had positive words for Ford’s new housing plan, contained in the More Homes Built Faster Act unveiled Oct. 25. The act would streamline approvals, relax zoning regulations and cut development fees among other reforms.

“It’s the most significant housing policy change in many, many years,” said Tal.

The news that Canada’s most populous provinces are likely to fall well short of affordable housing targets for 2030 came as little surprise to anyone who’s been following the country’s supply crisis in recent years – but finding a solution to that shortfall appears to be no easy task.

That’s partly because of the problems faced in attracting new construction workers to the industry, according to one of the authors of the national housing agency’s recent report revealing the likely failure of Ontario, British Columbia and Quebec to hit their 2030 affordable housing goals.

Dana Senagama (pictured top), Canada Mortgage and Housing Corporation’s (CMHC’s) senior specialist, market insights, told Canadian Mortgage Professional that attracting more young people within the existing labour force into construction remained a significant long-term hurdle to the prospect of higher inventory levels hitting the market.

“We already saw in the census that the construction industry is really having trouble attracting younger people between the ages of 15 and 24 to work in construction,” she explained, “and that’s concerning because we’re going to see more and more baby boomers retiring in the coming years.”

How might that be addressed? Greater youth participation in residential construction could be achieved by financial support for education in skilled trades and further vocational training facilities across the country, the report indicated, while more targeted immigration programs for foreign skilled workers could be introduced.

It also recommended that workers be paid a fair wage “with good benefits for working full-time, part-time, casually, or seasonally in the construction industry.” That would ensure greater retention of employees as well as keeping work running smoothly with fewer disruptions, the authors argued.

While CMHC’s report found that labour capacity appeared to be higher when building condominium apartments or high-rise construction, an important caveat is that many of the units in those buildings are unsuitable for families, or more than one resident, because they’re often too small, Senagama said.

Meanwhile, with construction often a long-winded and drawn-out process, she said converting existing commercial buildings into residential properties could potentially provide a more immediate solution to current supply deficiencies.

“One of the gifts of the pandemic is [that] working remotely became the acceptable norm,” she said. “So we are seeing across Canada a lot of these buildings being vacant. Is there a potential to convert that into residential buildings, where already the services are established?”

Of course, such an approach would require those buildings to have their suitability for conversion closely assessed, Senagama added, before that process began.

Ontario and British Columbia are traditionally viewed as the two provinces in Canada with the tightest market conditions and housing supply, with prices having boomed in recent years partly due to the lack of inventory on the market.

Quebec shouldn’t be overlooked as a market that’s also experiencing a scarcity of much-needed supply, according to Senagama, although she also noted that the price measures in that province differed from those elsewhere.

“They don’t have the same price measures of affordability as do Ontario and BC, and that’s really where you’re looking at an average house price over $1 million – that’s not an entry point for many people,” she said. “So affordability is far more of a concern, particularly in the urban centres of Ontario and BC – less so in Quebec.

“But that’s not to negate the challenge there as well. You still need to build more to accommodate the increasing population.”

The implications of not addressing those challenges could be stark, with the possibility that affordability in the housing market – already out of reach for many Canadians – will continue to decline steadily.

Real estate giant RE/MAX Canada has already sounded the alarm in recent weeks on the prospect of an impending “crisis point” if housing supply continues to dwindle without being replenished.

The conclusion of the report, Senagama said, is that “this is a way bigger problem that really cannot be solved at the macro level, at the highest level in terms of the federal government.

“This needs to trickle down to every level – and the industry has to get on board. It’s an all-hands-on-deck approach. I think we all need to put our heads together and find a solution, because no one entity will be able to solve it.”

As per Altus Group their recently completed study for BILD (Building Industry and Land Development Association).

They have looked at various factors that might be contributing to housing affordability and supply issues.

Here in the Greater Toronto Area. One area that they looked at was development approval timelines, which I thought developers must be aware of:

This demonstrate that the approval timelines don’t seem to really vary based on project size.

Doesn’t matter if you’re rezoning for 3-50 homes or 400-500 homes, it’s probably going to take you a similar amount of time.

This in turn creates a strong incentivize to want to develop bigger projects.

Among other things, it brings down the “number of days per unit” metric shown in this second chart.

Size does matter!

Yes , it does, what is too small or too large size for each developer would be varies depends on their risk prospective , if capital is not a constraint, there’s a tendency to want to do bigger projects .

It unfortunate!

We should incentivize smaller infill projects. Our cities need development at all scales.

High Borrowing Cost Impacting GTA Real Estate Market, Bank of Canada Increases Policy Interest Rates By 0.75%, Rent Soar By Double Digits Annual Increase

It is noted that the August home sales is about 34% less compared to August 2021 but the average selling price still has a slight increase of 0.9% compared last year. The sales-to-new-listings ratio in August 2022 is 53% which is comparatively higher than the consecutive previous 4 months and is similar to the ratio of 55% in March 2022. 50%+ represents a more balanced market.

On 7 September 2022, the Bank of Canada announced to raise further the interest rate by 0.75% to help flight inflation. The decline of sales transactions has reflected the effect of higher borrowing cost to temporarily preclude the home buying of some households and investors.

“275,000 new permanent residents have arrived in Canada till July 2022” said Sean Fraser, Minister for Immigration, Canada In addition, 349,000 new work permits were issued during the same period of time. Further 360,000 study permit applications have been finalized so far in 2022.

In the detached house segment, the sold price over 2M is the third highest number of sales in August similar to the range of $900,000 – $999,999. It may indicate that some serious home buyers prefer paying the temporary high borrowing cost to get the reasonable purchase deals rather than high selling prices with strong competitions later.

In the condo apartment segment, the lower sold price ranges between $500,000 to $699,999 are the highest number of sales. These buyers who are most likely the first time buyers or investors can reduce the impact on high borrowing costs and can mitigate the risk in the future.

“Now, buyers are experiencing more negotiating power and motivated sellers are adapting to the more recent market conditions” said CEO and Broker of Record at Zoocasa. The property prices still depend on the local dynamic and neighbourhood.

Toronto condominium apartment rental market keeps to heat up during the summer vacation, resulting in extremely strong upward pressure on average rents. A shortage of rental supply becomes very undesirable situation caused by the rapid population growth of new immigrants and international students back in Toronto.

As per TRREB Q2 2022 Condo Apartment rental market report, the vacancy rate is less than 1% in most major municipal cities and the average rent for 1 bedroom reached $2,269 as at June 2022.

According to Rentals.ca August report, the average rent in Toronto is increased to $2,694, up by 24.2% :

– 1 Bedroom $2,329; 2 Bedroom $3,266

During this critical situation, the investors in particular of holding the brand new units are benefited from this upward rental to cover the extra interest payments

Housing starts decline almost 3% in August, amid concerns about supply

A recent report from the CMHC concluded that the country would need to build 3.5 million new homes by 2030 to reduce its shortfall and improve affordability. Canada is averaging only 200,000 to 300,000 new units per year. In addition, the Federal Government continues to welcome 1.2M+ new immigrants between 2021 to 2023. Housing crisis is a long term major problem!

For most post-secondary students, just getting by financially while passing classes is more than enough to occupy their time, however, everyone’s circumstances are different. There may be a time when you find yourself enrolled as a student and interested in buying a home.

Maybe you are a mature student who chose to go back to school at an older age after saving some money, or you received a significant amount of money through a gift or inheritance, or maybe you just worked really hard (and got incredibly lucky) with a job or investment.

On the other hand, many people have graduated but still have the dreaded student loan debts to contend with. This too will make buying a home a bit more complicated, but not impossible.

Being a student can be a demanding occupation, and it will make the home buying and home-owning process a bit more complicated. However, it can be done!

In this article, we will cover everything you need to know about buying a home as a student, or with student debt.

Students can get mortgages in Canada
The first thing to know is that in Canada there is no hard law that would prevent a university or college student from buying a home or getting a mortgage. But, just because you can doesn’t mean it will be easy. Getting a mortgage will depend a lot on if lenders are willing to provide you with funds, and this will be your biggest barrier as a student.

Can international students buy houses?
In general international students can get a mortgage in Canada. In fact, even with the new foreign buyers ban coming into effect soon, an exemption is made for international students. The only difficulty may be in working with your bank in your home country to verify income and international credit history.

How being a student can affect your mortgage approval
There are many ways that being a student can affect your mortgage approval.

The first is the fact that most students tend not to have a lot of money, so having enough for a down payment will be tough. Assuming you do have enough for a down payment, there are still other factors that will affect your qualification.

For example, students tend to be younger, and may not have had the time yet to develop a strong credit history. This will be a big factor in your bank’s approval process, so make sure you have a strong credit score if you want your best shot.

Another factor is income. You may have a down payment amount through a gift or inheritance, but you will also need to keep up with regular payments.

This naturally means you will need a pretty high income. The issue is that it can be hard to maintain a job that pays enough to cover your mortgage while also keeping up with your studies. While owning a home would be nice, you should not buy a home at the expense of your academic performance if that is something you also value.

Finally, a lot of students take loans to cover their tuition and other education costs. This will affect your ability to buy a home, but we will cover this more in-depth in a bit.

How being a student can affect homeownership
Assuming you are able to buy a house as a student, you may still face some challenges as a homeowner.

As we mentioned before, homes can be costly, and keeping up with not just your mortgage but also any necessary maintenance and other home costs can be difficult if you can’t commit to your job full time.

Another factor is that home improvements and maintenance can take a lot of time, which can be in conflict with your education. What will you do when you need to make an urgent home repair in the middle of your stressful exam season?

You may also choose to rent out the home you live in, and this can necessitate even more work through finding tenants and keeping up with their needs.

Benefits to owning a home as a student
On the other hand, there are many benefits to owning a home as a student.

If you choose to live in the home you purchase, you won’t need to worry about tracking down a student rental property. And you won’t need to deal with the sometimes questionable quality found at such rentals. Also, you won’t have to worry about a landlord or roommate affecting your living situation.

Also, you will have the benefit of simply owning a home! That means you have a reliable place to stay, study, and get a head start on your life outside of school.

On the other hand, if you choose to rent out your property, this can help to offset the costs of owning it as a student. Getting extra pocket money through rental income will depend a lot on your ability to cash flow a property, which is not viable in every market. However, you can offset a lot of the cost of the mortgage, which can help you build equity to grow a larger rental portfolio, or just to have a lot of your home paid off if you choose to stop renting after you’d graduate.

Can I get a mortgage with student loan debt?
Even once you’ve moved on from school, you may still have some student loans remaining by the time you are interested in buying a house. This is concerning because a mortgage is debt just like student loans, and your lenders will not let you take on more debt than you can afford. This can affect how much of a mortgage loan you are able to borrow.

The conventional approach is to pay off as much existing debt as possible before buying a home. After all, if you can save enough for a down payment, you could easily save enough to pay off student debts. This will also help you to get the best mortgage possible and alleviate some financial stress.

Not everyone’s priorities are the same though, and some people will prefer to buy a home before paying off student debts. If you choose to go that way, here’s what you need to know.

Understanding your debt to income ratio
Your lender will look at two key debt ratios when approving you for a mortgage. One is your Gross Debt Service Ratio (GDS), which represents the ratio of your income to the cost of your housing. This generally won’t be affected by student loans.

The other ratio is your Total Debt Service Ratio (TDS), which represents the ratio of your income to all of your debt service requirements, such as housing, credit card debt, student debt, and more. This is where your student debt will come into play.

Most lenders will not let you get a mortgage with a TDS greater than 44%. If your loan payments are too high, or your income is too low, you will not be able to qualify.

On the other hand, making your monthly student loan payments regularly can help to improve your credit score and establish a credit history which will actually help in getting approved for a mortgage.

Figuring out if you are qualified
If you are in doubt, there are some ways you can figure out if your mortgage plans are viable. For one, you can try for pre-approval with a lender and learn the hard way whether or not you are ready to buy. You may also choose to talk to a mortgage broker, who can help to tell you if you will be able to get a mortgage and help you to find mortgage lenders that will be best for you.

 

When it comes to borrowing a mortgage with higher than average debt, it may be a good option to work with an alternative mortgage lender. These lenders often have looser terms than the big banks and may be more willing to find a solution for a borrower with high debt. Again, your mortgage broker can help you negotiate a good deal in this situation.

Investment real estate with student loan debt
While it is generally advised to pay off your debts before you buy a home, this may not necessarily be the case if you are buying for investment purposes. For example, if you have enough money to either pay off your debts or purchase a rental property, depending on your cash flow potential it may actually be a better financial move to go for the rental. The reason is that if you are able to make more money from rental income than you would incur on interest from your debt, you will ultimately be earning money.

Conclusion
There is nothing that would strictly prevent a student or someone with student loan debt from getting a mortgage in Canada. Ultimately, the primary concern of any mortgage lender is how financially capable you are of keeping up with mortgage payments.

If you have a high income, a good credit score, a decent down payment, and not too many other debts, you should be able to qualify for a mortgage. If you are lacking in some of these areas, you may be able to qualify with an alternative lender. Otherwise, it may be best to wait until you are more financially stable, or consider other options like a rent-to-own home or a co-signer.

The federal government announced back in May that all assignments will be subject to a 13% HST tax in Ontario.

This tax has also been applied, but we used to have specific workarounds – but as of May 7th, those workarounds no longer apply.

What does this mean for you?

You pay HST on the deposits plus an additional 13% on the increase in home value once the assignment is complete.

For example, if you purchased your home for $600,000 but then sell it for $800,000, you’ll need to pay an additional 13% on the $200,000 profit you made.

So, how can I help you save?

There are some key deductions you can make along the way to reduce the amount of HST you owe.

Since May, our clients have saved between 15% & 20% following these guidelines.

You can SAVE MONEY by claiming HST on your closing expenses, such as:

  • realtor’s commission
  • lawyer fees
  • other assignment-related expenses, such as staging or upgrades you’ve done on the property.

You see, the CRA will be after your money pretty quickly if you’re not careful. They’ll charge HST on what we pay for goods sold, which means it’s important to deduct that from everything else throughout the process, so there isn’t too much left over when all is said and done!

In this case, we will deduct the HST tax from what you pay them upfront to cover the cost of goods sold, which will partly offset the deductions throughout it all.

The Bank of Canada has increased its benchmark rate by 0.75%, marking a fifth consecutive hike in its latest effort to get surging price growth under control.

The central bank’s move is its first three-quarter-basis-point jump of 2022, bringing its trendsetting policy rate to 3.25% – a full three percentage points above the rock-bottom level it occupied from the beginning of the COVID-19 pandemic to March of this year.

Still, the increase was also a smaller hike than that contained in the Bank’s previous announcement, with that July 13 decision seeing an unexpected 1% jump to combat inflation that has been spiking ever upwards in recent months.

The Bank’s announcement means that the benchmark rate is now above the so-called neutral rate, the level at which economic growth is neither boosted nor constrained, which is currently between 2% and 3%.

The Bank of Canada has increased its benchmark rate by 0.75%, marking a fifth consecutive hike in its latest effort to get surging price growth under control.

The central bank’s move is its first three-quarter-basis-point jump of 2022, bringing its trendsetting policy rate to 3.25% – a full three percentage points above the rock-bottom level it occupied from the beginning of the COVID-19 pandemic to March of this year.

Still, the increase was also a smaller hike than that contained in the Bank’s previous announcement, with that July 13 decision seeing an unexpected 1% jump to combat inflation that has been spiking ever upwards in recent months.

The Bank’s announcement means that the benchmark rate is now above the so-called neutral rate, the level at which economic growth is neither boosted nor constrained, which is currently between 2% and 3%.

With a housing market that’s pricing out many in the Greater Toronto Area and stricter mortgage rules in Canada, private lending is becoming more popular among those looking to secure loans to buy a home — but experts warn there are risks involved.

The value and number of mortgages funded by alternative and private lenders have increased in the past five years, according to the Financial Services Regulatory Authority of Ontario (FSRA), an independent regulatory agency created to improve consumer and pension plan beneficiary protections in Ontario and regulates sectors, including mortgage brokers, loan and trust companies and credit unions.

The agency says the value of mortgages by private and alternative lenders has increased from $13 billion in 2019 to $22.4 billion in 2021 and the number of mortgages rose from 30,435 in 2019 to 36,568 in 2021.

In 2019, t​he ​total value of mortgages brokered ​by licensed brokers in Ontario ​was $139.5​ billion, which means that private lenders accounted for 9.3 per cent of mortgages in the province.​ ​That share of the market rose to 11.6 in 2021, as the overall value of mortgages brokered in Ontario increased to $193 billion that year.​

Zahra Marani, managing partner for real estate and private lending with Marani Law LLP, says her law firm has seen private lending become an increasingly popular option, especially among clients who are looking to refinance a mortgage.

“I’m seeing people who certainly would have been at the bank not so long ago who just have no choice but to turn to private lending,” Marani said.

“Not only are we seeing an increase in the need for private funds, we’re also seeing an increase in the rates that are being agreed upon by the borrowers and lenders and the brokers, because it’s costing more to borrow at the banks.”

For prospective homebuyers, there are two ways to get a mortgage: the traditional financial institutions, like banks and credit unions; and private or alternative mortgages, which are offered by investment corporations or mortgage finance companies.

So why are people turning to the latter?

Antoinette Leung, head of the FSRA’s Financial Institutions and Mortgage Brokerage Conduct, says the demand for private mortgages has increased in large part due to the current housing market.

Leung says more stringent underwriting guidelines by federally regulated financial institutions, as well as self-employed individuals who may not have a steady income, have also been a factor in turning people away from traditional mortgages to private lending options.

“These are quite well established lenders with sophisticated processes [who] have experience with underwriting all the way down to individuals who may have extra money to invest,” Leung said.

Bank of Canada hikes rate to 2.5%. Here’s what it means for you

 

“So, you really have a range and we’re seeing an increase over the last few years.”

The reason? An alternative mortgage lender has different lending criteria than big banks and could provide a way to get a loan when an individual doesn’t meet the requirements for a conventional mortgage.

But going with a private lender comes with risk as well. Experts say the rates can be higher, and customers need to do more due diligence about who they’re borrowing from.

A CBC News investigation this week revealed Paradise Developments Inc. — a licensed developer building homes in GTA communities — has been trying to prevent a number of individuals and companies from collecting deposits for homes in its developments.

The unlicensed and unregistered companies identified were also claiming they could offer 30-year private mortgages with interest rates as low as 2.75 per cent and low down payments — something Marani, the real estate lawyer, says “has red flags all over.”

Consumers should beware of fees, penalties
The FSRA found consumer protection concerns in private mortgage examinations, in particular with those who may be more financially vulnerable and could be taken advantage of in these transactions.

The agency says mortgage agents should know the financial needs, circumstances, goals and expectations of their clients — both borrowers and private lenders.

Leung says consumers should beware of fees and penalties when entering into a private mortgage agreement.

Marcel Ghazouli, a licensed mortgage broker with Premiere Mortgage Centre, says he’s also noticing more clients borrow from private lenders often at sharply higher interest rates than would be available through a bank.

“It has picked up as of late as rates have been increasing and also due to the after effects of the pandemic, whether that’s life changes related to work, health [or] family issues,” Ghazouli said.

Ghazouli says private lending, which is typically short-term loans that can be anywhere from a year to 18 months, are designed to “bridge the gap between one scenario and the next,” such as moving from a private lender back to a more traditional institution, such as a bank.

“What many people don’t realize is that these private mortgages don’t automatically renew once they’re up for renewal,” he said.

“The lender can impose a renewal fee. So that’s something that should be asked and clarified during the process so that they know what they’re up against.”

Qualification for mortgages ‘a concern’

In July, the Toronto Regional Real Estate Board (TRREB) revealed overall sales fell 47 per cent from the same time last year.

“Over the last couple of months, we’ve seen historic increases in mortgage rates and we’ve [also] seen rates increase quite dramatically,” said TRREB president Kevin Crigger in an interview with CBC Toronto.

The board said sales in July, which amounted to 4,912, were almost half the 9,339 homes sold the same time last year.

Crigger said while he personally hasn’t seen a large amount of clients turning to private lenders, “qualification definitely is a concern for some and people are qualifying for less,” as the mortgage stress test continues to increase along with interest rates.

Toronto is known for many things as Canada’s biggest and most bustling city. Some of these are positive, like its diverse culture, rich history, and fan favourite sports teams. Others, not so much, like the incredibly high cost of living that Torontonians get to enjoy.

Though the title for most expensive of all is often traded with Vancouver, there is no question that these two cities simply cost the most to live in among all in the country. However, in the case of Toronto, there are at least a few million more residents in the area, making these high prices an issue for many more people.

The cost of living in a given area is a reality that essentially everyone must think about on a daily basis. For those already in the city, the amount of money they need to get by naturally is a major consideration, while for the thousands of new residents that come to the city a year, the cost of living is a major factor that determines whether or not their move is going to work out.

And yes, even for real estate investors the cost of living is a major consideration. Now, if you’re considering investing in real estate in the city of Toronto in 2022, you probably aren’t the type of person who is struggling to make ends meet. However, you are likely hoping your investment performs well and makes you some money in the long run.

The cost of living in a given area can be a major economic driver and will influence local real estate markets in a large way. Understanding this figure can be important for real estate investors looking to conduct due diligence on their property purchases or those who rent properties they own.

In this article, we will explore just what exactly it costs to live in Toronto today, why prices may be going up or down, and ways you can help yourself to afford life in the big city.

What does it cost to live in Toronto?
The amount that a person spends to live in a given area is naturally going to vary from person to person. Each person lives according to their own lifestyle and means, and some may spend far more than others. For this reason, it can be difficult to determine exact figures for the cost of living, though various sources have created estimates based on their own data.

It is also important to know that the cost of living changes all the time, and it isn’t always going up. As prices fluctuate, it can cost more or less to live somewhere on a month-to-month basis. For this reason, data that is even a few months old may not be completely accurate, though it likely doesn’t move so fast as to make it unreasonable to use old data for a ballpark estimate.

With that out of the way let’s look at a few sources of what it costs to live in Toronto.

 

Renting
In the city of Toronto, it is estimated that about half of the population rents the home they live in, meaning rent prices are a major consideration when looking at cost of living. In general, home expenses for renters are some of the largest regular costs they must contend with.

The Toronto Regional Real Estate board tracks rent prices in the GTA on a quarterly basis, with the most recent data release available dating from Q2 of 2022. At that time, the average monthly cost for a one-bedroom apartment was $2269, up from $1887 in Q2 2021.

Rents in Toronto proper were very much on par with the regional average ($2279) while Innisfil reported the highest average monthly rent in the GTA at $2850 for a one-bedroom (though data indicates only 7 such apartments being rented in this period, compared to Toronto’s over 6000).

Recently, Statistics Canada released its most recent census data which reports on average incomes across Canada, though these incomes date from 2020, so they may have increased slightly since. At the time, the average after-tax median income in Toronto was $85,000.

To rent the average one-bedroom apartment for a year would cost about $27,350 or around 32% of this average salary The conventional measure for affordable housing is that it should not cost more than 30% of your income. Based on these figures it is clear that many Torontonians are well into unaffordable territory.

Owning a home
Owning a home may help you to escape the high cost of rent, though you trade that for even higher mortgage carrying costs. This is due in large part to the absolutely massive home prices in Toronto.. At their peak in 2022, home prices hit an average price of above $1.3 million in the GTA.

In recent months, however, prices have begun to fall in many areas, and the current average being reported by TREB is $1,074,754, almost $300,000 less than just months ago. While it may seem that this means the cost of a home has decreased in Toronto, this isn’t exactly true.

The actual price of a home is not the factor that will affect a homeowner most on their monthly bottom line. While home prices have fallen, this has been largely in response to increased interest rates, which actually eroded affordability further for Torontonians. Your home may be cheaper now, but the cost of paying your mortgage will actually have increased.

Down payment costs
Before you can buy a home you need to first surpass the barrier of a large down payment. Remember: On a home greater than 1 million dollars (as many in Toronto are), the minimum allowable down payment is 20%, or about $200,000.

Looking at the median income from before, and assuming a resident could save 10% of their yearly income (on top of the already high rent prices, and ignoring the effects of inflation) it would take them over 20 years to even have enough for a down payment.

Unfortunately, the median income earner in Toronto would likely have a hard time even being approved for a mortgage Toronto given their high prices. According to a recent report from Ratehub.com, a buyer of an average home in the city would need to make over $200,000 a year in order to service a mortgage.

Mortgage costs
Once you buy the home, you need to consider the carrying cost of a mortgage. Assuming a home of $1 million with 20% down and a fixed mortgage at about 5.5%, your monthly payments would cost over $4800 a month. This is before you consider all other costs of owning a home such as utilities, repairs, furniture, and more. With interest rates still rising, mortgage costs may continue increasing even further in the near future.

Property tax
One piece of good news about the city of Toronto is it does have some of the lowest property taxes in the province. Even given the high cost of homes, residents in Toronto pay less property tax than much cheaper homes in other municipalities. The cost is still not negligible, however, at about 0.6% of the value of your home, or around $6000 a year for the average home.

Other expenses
We’ve spent some time looking at the cost of housing in the city of Toronto. Though this is the largest part of most people’s spending, it is only one component of a household’s average monthly costs. Here are some more costs to consider.

Utilities
For most people their home is much more than just a shelter. We must pay for the various utilities that keep our homes comfortable and keep us connected, such as water, gas, electricity, internet, and mobile phones. These costs will vary a lot between homes and lifestyles, but the estimated monthly costs for utilities can add up in the range of $200 – $500 monthly.

While things like internet costs can vary based on individual plans, the rates for utilities like water, gas, and electricity will be the same across most houses in a given area, so your main option for reducing costs will be simply to conserve your usage.

Essential purchases
Then there are also the essentials of everyday life, such as clothing and food costs. Numbeo.com estimates that an average household in Toronto may spend up to another 30% of their monthly income on food and clothing costs.

Unfortunately, things like grocery costs have been on the rise in recent months, however, residents can save money by reducing food waste, opting for low-cost options, and taking advantage of sales and points programs.

Transportation
Finally, another major component of life in the city is transportation. Luckily, those who live within big cities have much better public transit options than in many other areas. Say what you like about the TTC, but you must admit that it is far better than the alternative of no transit at all, such is the case with many rural and remote areas.

With public transit, residens can get around the whole city quite easily via subways stretching from Union Station in Downtown Toronto to the far edges of the city, as well as an extensive system of bus routes. Though the routes in the TTC system cover the city quite comprehensively, everyday riders will inevitably be forced at some point to contend with delays and other headaches that come with public systems.

With a yearly plan, riders can get a discount on their monthly pass and access the TTC network for $143 a month. Without a yearly plan, a monthly transit pass regularly costs $156, and discounts are available for seniors, youth, and post-secondary students. While this can likely be much cheaper than a car based on how much you travel, it may also be much more inconvenient based on your lifestyle.

If you choose to own a car in the city you open yourself up to a whole new range of expenses. The cost of each household’s personal vehicle will vary on a number of different factors including the car you buy, financing costs, your insurance rates, your maintenance needs, and how much you drive. All transportation costs factored in this can easily cost a driver more than $500 a month.

How much do I need to make to live in Toronto?
If you are hoping to live in the City of Toronto or the GTA, figuring out if you have enough money will be a major deciding factor. As mentioned before, the most recent census reports an average median income of $85,000, meaning at least half of the city is at or below this line.

Now, naturally the more you can make the better, and those who are only earning minimum wage will find it much harder to get by than higher earners. Though it may seem intimidating, there are a number of benefits that can make a life in the city comfortable despite the costs.

One such factor would be a large number of housing options, allowing you to split your bills with various roommates (though you will still need to contend with low vacancies). Another benefit is a large number of jobs in the city, many of which are relatively well paying. And finally, options like public transit can help you to reduce expenses that may be harder to reduce in smaller cities and towns.

For those hoping to buy a home, you have a much harder task ahead of you. Saving a large enough down payment will likely be your largest difficulty in buying a home in Toronto, but in order to maintain your mortgage estimates indicate you would need to make a combined household income of over $200,000 or more. Again, similar benefits apply when buying in the city – lots of job options, and many different housing types and areas. If you plan on buying a family home and you work in the city, it may be worth considering becoming a commuter to enjoy less crowded, and less expensive, areas in the region.

Are prices going up in Toronto?
Across the board, the cost of living has generally been increasing in Toronto, like in most of Canada. The way we know this is due to the inflation rate.

Many people think that the rate of inflation is an abstract measure, but in reality, it is based on a well understood formula known as the Consumer Price Index (CPI). The CPI tracks a set basket of everyday costs that reflect the average cost of living. These include things we have mentioned here: food prices, clothing, housing, utilities, transportation, and more.

The CPI is a retroactive measure – it looks back at how prices have risen over a given period, meaning an increase in CPI indicates an actual rise in prices, not a hypothetical future increase.

Even as the Bank of Canada attempts to slow inflation, a lower inflation rate still represents an overall growth in prices. Inflation when kept under control, is not a huge issue – when growth is slower, however, people are able to adjust more easily and wages can keep up with inflation. When inflation is too high, it can quickly become too much to handle, thus recent efforts to slow its pace.

Why is rent increasing?
As mentioned before, the price of rent has been increasing for the last year or so as well. This is due in part to the increased costs of things like utilities and maintenance equipment that increase the costs of running a rental property.

On the other hand, the rise in rent can also be seen as a symptom of supply and demand. The supply of rental inventory in the city is very low, with less than 1% vacancy across much of the GTA. At the same time, the demand for homes is only increasing with the return of many post-secondary students, immigrants, and those wishing to live close to their jobs. There has also been an increase in the rental market from the many people being pushed out of homebuying by increased costs of buying.

Why are home prices falling?
The prices of homes in Toronto have actually been trending down in recent months. The largest cause of this downtrend is the rise of interest rates, which affects how much buyers are able to afford to borrow, putting downward pressure on the sky-high prices seen previously.

However, Toronto real estate has long held value very well. While the city has gone through down periods in the past, it has always turned around eventually, and the upward growth of prices in the city over the long term is a near certainty. Prices may be down temporarily, but they are unlikely to fall so low to be considered anywhere near cheap or even affordable.

Affordability tips for living in Toronto
For those concerned with the rising costs of living in the city, there are luckily some ways that you can help to make your lifestyle more affordable. Short of increasing your income, which is often out of one’s control, the best options are ways to reduce your overall expenses. here are some things to consider:

  • Use public transportation whenever possible if you aren’t already. The cost of gas, parking and car payments can take a serious dent out of your finances.
  • Reconsider your living arrangements. This could include living with roommates to help split bills, moving to a different neighbourhood if you are a remote worker or don’t mind the commute, or even leaving the city altogether if the high housing costs simply aren’t worth it anymore. Living as a single person will usually cost more than living with others.
  • If buying a home, consider looking into first-time home buyer incentives and rebates, such as the land transfer tax rebate that can save you thousands on your home purchase.
  • You may also want to consider alternate housing outside of the popular single-family home. Townhouses and condos are both abundant and much cheaper for example. Another option may be to co-buy with friends and family or live in a multigenerational living arrangement.
  • If you own a home, think about renting out a portion of your property to help offset the costs of your mortgage. This not only helps you to save money but also adds much-needed rental inventory to the marketplace.

Real estate investment trust shares have been under pressure this year due to rising interest rates, which could lead to more price declines. Nevertheless, publicly traded REITs still offer an enticing long-term investment opportunity, according to a Morningstar analyst.

According to Kevin Brown, Morningstar’s senior equities analyst for REITs, the U.S. Real Estate Index, which mostly includes REIT shares, has decreased this year because of the Federal Reserve raising interest rates to combat inflation.

Brown told ThinkAdvisor that the fundamentals for the REIT stocks he monitors have been generally selling at a 20% discount to their fair market value. Still, he believes rising inflation would continue to favor REIT cash flows in 2022, and wrote many companies are expecting record growth.

“I think that the movement out of the REITs because of rising interest rates has been sort of overdone, which is why we think all the names are trading at basically a 20% discount to our fair value estimate,” Brown noted in a recent interview. Fair market value, he noted, is the level Morningstar’s analysts forecast companies will reach in three to five years.

In comparison to the Morningstar U.S. Market Index, which fell by 7.5% through Friday’s close, the firm’s real estate index was down 3.7% during the previous 12 months. However, Brown pointed out that while the market index is unchanged over the preceding three months, the real estate index is down 3.5%.

While share prices may be down, he said the bulk of REITs are generating growth substantially above historical averages and REIT sector operations – including businesses with a focus on self-storage facilities, hotels, healthcare facilities, apartment buildings, single-family rental homes, malls, and shopping centers – are generally thriving.

Since rents are high, REITs in many property sectors have transformed single- and low-double-digit net operating income growth into gains of 15% to 20%; occupancy is reportedly sitting at peak levels, and the businesses have done a good job controlling expenses. Second-quarter earnings reports have shown numbers that are significantly higher than expected.

REIT prices would likely underperform the rest of the market if interest rates kept rising, according to Brown, but this underperformance will correct itself and shares will eventually return to their long-term valuations.

But as with any investment, REITs have risks and rewards, with the advantages involving more than just the potential for long-term price increase. If banks stop lending or severely tighten lending rules, as they did during the 2008–2008 financial crisis, REITs could be exposed to another risk, according to Brown.

He added that “triple net” REITs, which commonly control buildings with corner retailers like drugstore chains and in which the tenant has responsibility for property upkeep, operations, and repairs, are ideal choices for investors looking for good dividends.

These days, the word real estate is often synonymous with structures. Homes, apartments, shops, factories and the like are all often thought of as real estate – but this is really only half the picture. Underneath every building in real estate is the land it rests on, which is itself a valuable asset and an opportunity for investors.

Though it may be a slightly different market with different players, there is just as much interest in buying vacant land in Ontario as there is in buying homes. The biggest appeal for vacant land comes down to its potential: a raw piece of land can be shaped into nearly anything the owner wishes.

For some, this means buying land to build their dream home. Others, like developers, will buy larger plots of land to build whole neighbourhoods or apartment buildings. A third use may be for commercial purposes, buying land for a new warehouse, factory, or shop for your company.

As the literal foundation upon which any building is constructed, the land is clearly important. That’s why it’s crucial when you plan on pursuing a construction or development project to ensure you understand how buying land works and how to choose the right land for you.

Why buy vacant land?
Vacant land can be as sound an investment as any other real estate purchase. Though we have a lot of it in Ontario, land is still a limited resource and will hold its value over the long term.

Vacant land won’t offer investors a lot of cash flow upfront, but there are near limitless options for improvements that can add value to the property. Buying vacant land may be an excellent option for those looking for an alternative to residential investments or someone looking to get into real estate developments.

The three types of vacant land in Ontario
Though empty plots of land may seem all the same to you, there are three distinct classifications of land in Ontario. These are vacant land, raw land, and crown land. These three classifications differ on a few points, such as the cost to buy, the cost to develop, how they are financed, and more.

The first is vacant land, which is land that usually exists within a municipality and has some existing utility services such as power, water, and septic, and is therefore prime for development. As a result, vacant land can be a bit more expensive than other plots.

The second type is raw land. As opposed to vacant land, raw land is almost entirely undeveloped and is usually found in more remote areas. There will be no utility connections, and there may not even be road access. Naturally, this offers great potential but also higher costs of development, and these pieces of land are a bit cheaper.

The final type of land in Ontario is Crown land, which is land owned and managed by the provincial government. In Ontario, 87% of our province is classified as Crown land. Crown land is primarily found in the North, with little Crown land existing south of Sudbury.

Crown land can be either purchased or rented from the government, but there are special processes in place that differ from your standard land purchase. We will cover this in more detail further on. Once you buy or rent crown land, there will also be restrictions on how you can use it.

Buying vacant land
Buying vacant or raw land is a lot like buying a residential property. You can find listings for land through online listing services. After, you may work with a real estate agent to make the purchase, and a bank can help you by financing the purchase. But, buying vacant land isn’t exactly the same as buying any residential property.

When buying land, it is important to consider what you plan to do with it and what properties will work for your purposes. For example, if you are planning on building a home, buying vacant land with existing road and utility access may be ideal, and you may want to purchase near a city of your choice.

Once you know what you are looking for, you can start looking for land listings in your area. Before you purchase anything, you must do some research on the property and local laws.

Unlike a home, it may not always be obvious what you are getting with land, and in terms of construction, there may be local regulations and zoning laws that will need to be accounted for. In some cases, it may actually be legally impossible to build the structure you want on a given piece of land, and you need to be aware of this before you buy.

Buying land often includes a land survey to determine boundaries, a geological survey, a soil test, and more. These are all crucial to determining the viability of your project.

Some real estate agents specializing in vacant and rural land purchases will be an invaluable help in this process, especially if you are inexperienced in the field or new to the area. Your agent may also be able to connect you with other people that will be essential to your land purchase, including land surveyors, real estate lawyers who specialize in vacant land, and developers or builders.

Buying or renting Crown land

Crown land has its own unique process for purchasing or renting that requires you to go through the Ministry of Natural Resources and Forestry. One crucial fact to know is that if you plan to build a residential home on Crown land, you will only be able to buy within the bounds of an existing municipality.

When you are approved to use Crown land, also as Occupational Authority, you will be granted one of the five following documents:

  • A land use permit allows the property to be used for specified activities for up to 10 years but does not offer any ownership or interest in the land. No extensive improvements or developments may be made to the land.
  • A license of occupation is similar to a land use permit but can last for up to 20 years and is transferable between parties (subject to ministry approval).
  • A lease provides exclusive use of the land for as long as the lease is active. With a lease, improvements and developments can be made on the land, and the lease can be used as loan collateral.
  • An easement is a limited lease generally designed for things like the construction of power lines, pipelines or roads. The ministry may sell any land with an easement, but the buyer will be subject to the easement holder’s rights.
  • A freehold letters patent grants the holder of the patent private ownership and use of the land. This is the least restrictive form of occupational authority and is only subject to conditions like road construction rights and mining rights. In addition, the rights granted by a freehold letters patent can be transferred through a sale.

The price of purchasing or renting crown land will be based upon the determined market value of the property. For more information or to apply for disposition of crown land, visit the Ontario government’s page on how to rent or buy Crown land.

Financing for vacant land
Vacant land is generally seen as a less secure loan for lenders due to the lack of any extensive structures that hold value and the fact that borrowers of vacant land aren’t at risk of losing their homes in the event of a default. As a result, a vacant land loan will usually require a higher down payment of 30% to 50%. These loans will also likely have larger interest rates.

Raw land will usually have worse loan conditions than vacant land due to its high cost of development, low potential for returns, and low potential resale value if the bank must execute a power of sale.

Due to their higher risk, you may need to consider multiple lenders before finding one willing to finance your property purchase. This may include alternative lenders and private landlords.

Some buyers who already own a home may choose to instead purchase land with funds from their existing home equity, such as with a HELOC. This will secure the money against your home and allow you to access better interest rates. Other options for financing may include personal loans or seller financing.

Does vacant land have property taxes?

Vacant land within a municipality and remote land will be required to pay some property taxes. Just because there are no structures on the land doesn’t mean that your property won’t benefit from other municipal services such as roads and utilities.

Generally, municipalities have different tax rates for various property types, so your tax rate will differ from your home’s property tax cost. In addition, because there is no home on the property, your tax payment will likely be based on a lower appraised value.

In more remote areas, the province will administer its own Provincial Land Tax that is calculated similarly to a municipal property tax. For more information, see: Do you pay property tax on vacant land in Ontario?

There are also some other taxes and fees to consider on vacant land. One cost to consider when buying vacant land is the cost of land transfer tax, which will need to be paid on all transfers. In addition, some things like HST and capital gains taxes may apply.

Building on vacant land
Once you buy land, you will probably want to build on it. This is a whole other process with many intricacies to consider. However, if you make sure to purchase suitable land to begin with, this will help make things go a lot smoother.

Building a home can take up to two years and will require the help of many different skilled professionals. Your first step should be to shop around for quotes from other builders in your area and try to find a reputable one who you would like to work with.

Conclusion
Vacant land, like any real estate, can be an excellent investment and offers opportunities like no other. With opportunity comes many important decisions that will need to be made to ensure you get the right property for you.

As the foundation where any home is built, choosing the right land in the right area will be one of the most important decisions in any development or construction project. You must conduct thorough research before purchasing land in Ontario.

New home sales in the Greater Toronto Area (GTA) continued to ease in June.

According to a new report from the Building Industry and Land Development Association (BILD), the total new home sales of 1,694 units were down a notable 56% from June 2021 and 52% below the 10-year average.

The data is generated by Altus Group, BILD’s official source for new home market intelligence, and reveals a telling tale of the current climate — one where the frenzied pandemic-inspired real estate drama is decidedly a thing of the past (at least, for now it is).

“New home sales numbers for June reinforced the expected easing of sales from last year’s exceptionally fast pace,” said Edward Jegg, Research Manager at Altus Group. “With interest rates continuing to rise, high inflation, affordability pressures and general economic uncertainty, many buyers are adopting a wait-and-see attitude that is expected to run through at least the summer months.”

 

Sales of new condominium apartments — including units in low, medium and high-rise buildings, stacked townhouses, and loft units — with 1,519 units sold, were down 44% from June 2021 and 36% below the 10-year average. Single-family homes, including detached, linked, and semi-detached houses and townhouses (excluding stacked townhouses), accounted for just 175 units sold, down 85% from last June and 85% below the 10-year average.

While new home sales may be down, prices are up, says BILD.

The benchmark price for new condominium apartments in June was $1,189,894, which was up 12.4% over the last 12 months and the benchmark price for new single-family homes was $1,843,595, which was up 31.2% over the last 12 months.

Total new home remaining inventory increased compared to the previous month, to 11,639 units, comprised of 9,717 condominium apartment units and 1,922 single-family lots, representing 3.5 months and 2.7 months of inventory respectively. A balanced market would have nine to 12 months of inventory.

“While many prospective home buyers in the GTA are delaying purchasing the homes they need in the midst of economic uncertainty, our region’s fundamental challenges around housing supply remain unresolved,” said Dave Wilkes, BILD President & CEO. “Shorter-term demand-side economic conditions and inflationary pressures cool demand but increase the costs of new builds simultaneously. This will continue to impact overall supply. Now is the time for bold decisions by all levels of government to ensure we provide the housing supply and choice future generations of GTA residents will need.”

 

While interest rates have been on the rise for the past few months, the Canadian housing market continued to see price growth during the first six months of this year, according to the latest “Price Per Square Foot” survey by CENTURY 21 Canada.

The increases were particularly notable in suburbs and smaller communities outside metropolitan centres, spurred by a flight from the mounting unaffordability of the Greater Toronto Area and Greater Vancouver regions.

“While some markets have cooled after the boom that occurred during the COVID-19 pandemic, prices overall have continued to remain elevated for the start of the year,” CENTURY 21 said.

Long-term growth is also expected to continue despite fears surrounding higher interest rates.

“The highest point of the boom may have passed, but the trend is still towards higher prices, especially in suburbs where younger and first-time home buyers are looking to escape competitive metropolitan areas now that remote work has become more common,” said Brian Rushton, COO of CENTURY 21 Canada.

Rushton said that more volatility is not out of the question as the full impact of rate hikes will become clearer as the months go on.

“What will be interesting is to compare the data we’ve received from the first half of this year with the data we gather in 2023 to see how the rising rates impact the market for the next six months,” Rushton said.

“We don’t want to get ahead of ourselves, we’re going to keep seeing how the market performs and whether or not it cools down after the frenzy of the past year. With inflation on the rise, folks may be less able to purchase but even a slight dip would only take us to the level of a few years back, possibly the 2018-2019 period.”

 

Today, the City of Toronto announced the launch of an enhanced Home Energy Loan Program (HELP) that will offer zero-interest loans and incentives to help Toronto homeowners make their homes more energy-efficient and reduce the emissions contributing to climate change. The HELP program has been offering low-interest loans to homeowners since 2014.

Currently, homes and buildings are the largest sources of emissions in Toronto, generating approximately 57 per cent of total community-wide emissions, primarily from the burning of fossil fuels (natural gas) for heating and hot water.

For a limited time, through the enhanced HELP program, Toronto homeowners will be able to access:

  • Zero-interest loans of up to $125,000 for terms of up to 15 years; 20-year terms are available for retrofits that include rooftop solar PV, geothermal, new windows and electric heat pumps.
  • Incentives for specific measures including electric heat pumps, which can replace a home’s natural gas furnace and air conditioner; rooftop solar PV and deep retrofits that significantly reduce a home’s emissions.

 

The Government of Canada provided funding to enhance the program through the Green Municipal Fund, administered by the Federation of Canadian Municipalities (FCM), including a loan of up to $9.712 million to fund the zero-interest loans and a grant of up to $4.856 million. A portion of the funds will support the development of training, education and resources for homeowners, contractors and other industry stakeholders, including training for Toronto contractors to become a Net Zero Renovator, qualified by the Canadian Home Builders’ Association.

The new zero-interest loans and incentives will be available until the funding allocated for each is fully subscribed, after which homeowners can continue to access low-interest loans.

Home improvements eligible for financing include electric heat pumps, insulation (attic, wall, basement), upgraded windows/doors, air sealing, geothermal systems, rooftop solar PV, tankless water heaters, solar hot water systems, EV charging stations, battery storage and more.

Eligibility has been expanded to include tax-exempt properties (e.g. non-profit homes, supportive housing, rooming houses) in addition to the currently eligible detached, semi-detached, row/townhouses, and duplex and triplex apartment buildings.

Improving the energy efficiency of homes is one of the most substantial things that homeowners can do to help address the climate emergency. The highest impact measures include replacing a home’s furnace with an electric heat pump (which can provide both heating and cooling), insulating from attic to basement and upgrading windows and doors.

In addition to the loans and incentives available through HELP, homeowners may also be eligible for the federal government’s Canada Greener Homes Grant of up to $5,000.

The City’s HELP program supports the goals and objectives of the City’s TransformTO Net Zero climate action strategy, which set Toronto on a path to reduce community-wide greenhouse gas (GHG) emissions to net zero by 2040, and its Net Zero Existing Buildings Strategy which recognizes the need to transform housing. The accelerated climate strategy was adopted by Toronto City Council in December 2021. Toronto’s net zero target is one of the most ambitious in North America. The HELP program has supported 245 home retrofit projects since it was launched in 2014.

The City’s BetterHomesTO program further supports homeowners with a one-stop website with information about a range of home energy improvements – everything from air sealing and windows to insulation, heat pumps, green roofs and rooftop solar – including tips on what to look for when purchasing, cost estimates, and a list of all of the incentives and rebates available from all sources.

“Improving the energy efficiency of our homes and buildings will be key to reaching our net zero target by 2040 and advancing our TransformTO Net Zero climate strategy. Ongoing investment and action from all levels of government will be required to address the climate crisis and I thank the federal government and FCM for this funding. I encourage Toronto homeowners to take advantage of HELP financing and incentives, as well as the federal Greener Homes grant, to make their homes much more efficient and reduce the emissions that are changing our climate.”
– Mayor John Tory

“Improving energy efficiency and decarbonizing our homes is one of the biggest things that homeowners can do to help address the climate emergency. It will also create a better, more resilient future for our city. I encourage all homeowners to make a plan to improve their homes and explore the loans and incentives available through City’s HELP program and other sources.”
– Councillor Jennifer McKelvie (Scarborough-Rouge Park), Chair of the Infrastructure and Environment Committee

“Today’s $14.5 Million investment will enable the City of Toronto to build on the Home Energy Loan Program’s (HELP) legacy of retrofitting hundreds of homes, in line with Toronto and Canada’s ambitious climate targets. This is a tangible step towards bringing energy efficiency, job creation, and affordability to communities across Ontario and Canada.”
– The Honourable Jonathan Wilkinson, Minister of Natural Resources

“It’s critically important to have everyone in the climate fight. Municipalities across Canada are doing their part with innovative solutions that create jobs and climate resilience. Green infrastructure investments in Canadian communities will make our air cleaner, our economy stronger, and set us on the path to a net-zero future.”
– The Honourable Steven Guilbeault, Minister of Environment and Climate Change

“Energy-efficient homes are more affordable to heat and cool, while reducing emissions and allowing us to adapt to our changing climate. We are working as a partner to our cities to help Canadians make their homes more energy-efficient. “
– Julie Dabrusin, Parliamentary Secretary to the Minister of Natural Resources and to the Minister of Environment and Climate Change, Member of Parliament for Toronto-Danforth

“Municipalities are on the front lines of climate change and climate action, and communities of all sizes are showing climate leadership at a time when we need it most. The Green Municipal Fund empowers them to get results on the ground. We deliver results with our federal partners – supporting cities like Toronto build a greener, more sustainable community, create jobs and helping Canadians make their homes more comfortable and affordable. Together, we are on the path to net zero.”
– Taneen Rudyk, President, Federation of Canadian Municipalities